The work of the Swedish state and some authorities to prevent money laundering lacks effectiveness, according to a new report by Riksrevisionen, the Swedish National Audit Office.
Riksrevisionen says that the government’s management of the system for money-laundering supervision is weak, and that supervision by Finansinspektionen (the Financial Supervisory Authority) and the county administrations in Stockholm, Malmö, and Västra Götaland is not effective enough.
The report lists causes such as lack of a unified strategy for supervision, an absence of targets for supervisory authority performance, and the lack of follow-ups on work.
Henrik Allansson, project manager for the review, says this weak governance means the responsibility ends up with the respective authority – which only has limited opportunities for coordination and developing systems.
“The government needs to be clearer here,” Allansson said.
Loophole to escape sanctions
The report also shows that some industries are rarely subject to supervision, which can lead to certain industries being treated differently.
It was also found that certain types of companies were able to escape sanctions by shutting down their operations and then starting up again.
With so few supervisory cases, Riksrevisionen said that a business could operate for “a very long time” before being reviewed.
“Money laundering is a systemic threat. It is important that the system for money-laundering supervision is coordinated and developed so that it becomes more effective,” said Claudia Gardberg Morner, Director of the National Audit Office.
Lacking power and tools
The county administrations were also found to have inadequate tools with which to follow-up money laundering supervision, and the Financial Supervisory Authority did not have a systematic approach to identify companies that don’t hold required licenses or registrations
Bolagsverket, the Swedish Companies Registration Office, was also found to lack proper means to maintain the quality of the register of beneficial owners.
This is an important tool in the work against money laundering, especially when subjects are living abroad, Riksrevisionen concluded.
“Money laundering is a systemic threat. It is important that the system for money-laundering supervision is coordinated and developed so that it becomes more effective.”
Claudia Gardberg Morner, Director of the National Audit Office (Riksrevisionen)
Riksrevisionen has set out recommendations to the authorities and county boards.
Government should:
- implement a more coherent system for money-laundering supervision;
- clarify expectations of supervisory authorities;
- increase knowledge about how supervision contributes to limit opportunities to launder money;
- take measures to enhance the Swedish Companies Registration Office’s ability to maintain quality of its register of beneficial owners; and
- consider further legislative changes in order to make it more difficult to escape supervision by operating outside the system or by closing down and restarting businesses.
County boards should set up:
- a strategy that specifies how supervision should be designed in line with good regulatory compliance to prevent money laundering by various types of businesses; and
- a follow-up procedure of money laundering supervision and what results it achieves.
Finansinspektionen, the Financial Supervisory Authority, should:
- analyze the possibility of increasing the number of surveys; and
- do more to find business practitioners that are operating without a permit or registration.
Bolagsverket, the Swedish Companies Registration Office, should:
- consult with the county administrations to get a better view of the quality level in the register against money laundering; and
- make sure that systematic development work against money laundering is carried out for the register, and take measures to identify and remove those who should not be included.
