Shortcomings in state preventive efforts to combat money laundering
The preventive efforts of the state to combat money laundering fall short in effectiveness. The Government’s management of the anti-money laundering supervision system is weak, while at the same time the supervision of the county administrative boards and Finansinspektionen (the Swedish financial supervisory authority) is not sufficiently effective.
Money laundering is a threat to the financial system and society at large. Banks, currency exchangers, accounting firms and many other businesses are therefore obliged to take measures to combat money laundering.
Several government agencies conduct supervision to ensure that this is the case. However, the audit of the Swedish National Audit Office (“the Swedish NAO”) shows that anti-money laundering supervision is inadequate and that there are shortcomings in this work.
The Swedish NAO considers that the deficiencies are partly due to weakness in the Government’s management of anti-money laundering supervision. There is no overall strategy for supervision, there are no performance targets for the supervisory authorities and the Government does not request regular and detailed follow-up of their work.
“The weak governance means that responsibility falls to the respective authorities in practice. However, they have only limited possibilities for coordination and development of the anti-money laundering supervision system as a whole. The Government needs to be clearer on this,” explains Henrik Allansson, project leader for the audit.
The audit shows that certain sectors are very rarely subject to supervision by the county administrative boards and Finansinspektionen. There is also a risk of companies in different sectors receiving unjustifiable differential treatment.
Certain types of companies that are subject to supervision are also able to evade sanctions by closing down their business – and then starting it up again. The fact that the authorities initiate so few supervisory cases means that, in such instances, a business can probably be run for a very long time before risking scrutiny again.
The Swedish NAO also assesses that the county administrative boards’ control and monitoring of anti-money laundering supervision is weak, and that Finansinspektionen lacks systematic efforts to identify companies that engage in operations without having the requisite authorisation or registration.
The Swedish NAO furthermore assesses that the Swedish Companies Registration Office lacks sufficient powers and tools for maintaining quality in the beneficial ownership register, which is an important tool in efforts to combat money laundering. This is especially true in the case of beneficial owners that are located abroad.
“Money laundering poses a systemic threat. It is important that the anti-money laundering supervision system is coordinated and developed to make it more effective,” comments Deputy Auditor General Claudia Gardberg Morner.
Recommendations in brief
The recommendations to the Government include:
- create a more cohesive anti-money laundering supervision system
- clarify what is expected of the supervisory authorities
- consider further legislative amendments to make it more difficult for business operators to evade supervision by operating outside of the system or by closing down their business and starting it up again.
Recommendations to the county administrative boards include developing a strategy for how anti-money laundering supervision could help to attain sound regulatory compliance among different types of business operators.
Recommendations to Finansinspektionen include taking additional measures to find business operators acting without authorisation or registration.
See the audit report for the full recommendations.
Press contact: Olle Castelius, phone: +46 8-5171 40 04.
Presskontakt: Olle Castelius , telefon: 08-5171 42 06.
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