New report: Banks, financial institutes, goods retail and gambling run the highest risk of money laundering

Banking, finance, goods retail and gambling run the highest risk of money laundering

Banks have become more knowledgeable about money laundering and report more suspicious transactions to the police than before. However, knowledge of these issues is lower in goods retail, according to a new national risk assessment published by the Swedish Police Authority in April.

The report has been produced in collaboration between 16 authorities and the Swedish Bar Association. A total of 22 sectors have been analyzed to map and risk assess Sweden's challenges in the area of ​​money laundering and terrorist financing. The sectors with the highest risk assessment include banks, financial institutions, goods retail and gambling.

"Banks have increased their knowledge of money laundering and report significantly more suspicious transactions to the police than before. But the risk assessment shows that the goods retail sector continues to be used for money laundering. When knowledge of money laundering is lower, the risk of goods retail being used by criminals increases. Some still don't know that they are covered by the requirements of the Money Laundering Act and that they are, for example, obligated to report suspicious activity", says Linda H Staaf, Head of the Intelligence Unit, Noa, in a press release.

Other sectors mentioned in the report on the risk of money laundering and terrorist financing include company formation agents, business brokers and trust administrators, real estate brokers, payment institutions, payment service providers, issuers of electronic money, consumer credit and other financial activities, including currency exchange offices.

However, goods retail has - at least from a media perspective - been the sector that has perhaps been subjected to the harshest scrutiny in recent times, with penalty fees distributed to a number of both smaller and larger vendors.

"In their supervision, the county administrative boards have, for example, examined watch and car dealers who have had major shortcomings in compliance with the money laundering regulations. These companies have been dealt penalty fees of relatively high amounts", says Helena Remnerud, Head of the unit for supervision, at the County Administrative Board in Stockholm. The shortcomings include a lack of a general risk assessment of the companies' operations and that they do not meet the requirements for KYC measures in transactions and business relationships.

money laundering risks

Summary of the report

Assessment of money laundering

Among the businesses that are under the supervision of Finansinspektionen (the Swedish Financial Supervisory Authority), the assessment is that the highest risk level is found in the sectors banks and financial institutions. Banks represent the basic financial infrastructure and more or less all the money that is laundered needs to pass through the banking system at some stage. Financial institutions are also exposed to large risks for exploitation, in particular bureaux de change and the large-scale, large-scale unregistered trade in virtual currencies. Among the entities under the supervision of County Administrative Boards, threats and vulnerabilities are assessed to be highest in the sector goods retail.

County Administrative Boards also supervise other sectors in which the risk for money laundering is assessed to be high, namely company formation agents, business brokers and trust administrators. Gambling companies and real estate agents are at risk of being exploited for money laundering that goes unnoticed by the businesses themselves and the involved banks. The gambling market is considered to have the highest threat level due to its high availability and the possibilities to turn over relatively large amounts in a short period of time.


Assessment of terrorism financing

Unlike money laundering, the purpose of which is to hide the origin of assets, terrorist financing seeks to hide the destination of the money. It is possible to finance terrorism with small amounts of money, and these may be legally or illegally obtained. Money may be collected in various ways, for example by deposits in accounts that belong to private individuals, associations, foundations and companies, and may take place through money transfer agents. Transfers of money may take place through registered money transfer agents such as banks, credit institutions and payment service providers, but also through unregistered money transfer agents such as hawaladars.

The sectors assessed as being at the highest risk of terrorism financing are banks, payment institutions and payment service providers. Other sectors assessed as being at risk (although to a lesser extent) of terrorism financing are operators issuing electronic money, consumer credit and other financial activities, including currency exchange offices. The Swedish gaming market should also be mentioned in this context, considering the opportunity for both cross-border transactions and a certain level of anonymity


Read the full report here. (in Swedish)

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