Sweden

Last Updated: 09/04/2009

CENTRAL AUTHORITY FOR REPORTING

The Swedish Police Board, the Swedish National Criminal Police, Financial Intelligence Unit (the Swedish Financial Police).

OTHER ANTI-MONEY LAUNDERING REGULATOR(S)

The Swedish Financial Supervisory Authority (SFSA), Finansinspektionen. This is a public authority, whose official role is to promote stability and efficiency in the financial system as well as ensure effective protection for consumers. The SFSA authorises, supervises and monitors all companies operating in Swedish financial markets. The SFSA is accountable to the Ministry of Finance.

Lawyers are not regulated, supervised or monitored by this authority .

HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?

The Third Directive was implemented in Sweden by the Swedish Act 2009:63 on Measures to Prevent Money Laundering and Terrorist Financing (named below the Anti-Money Laundering Act, “AMLA”), which entered into force on March 15, 2009.

The Government Bill, Regeringens Proposition 2008/09:70 Genomförande av tredje penningtvättsdirektivet.

The AMLA, inter alia, introduces elements of a risk-based approach, addresses areas such as beneficial ownership and enhanced and simplified client due diligence and introduces new elements of enhanced reporting obligations, stricter observation rules on the law firms and operative supervision of the Swedish Bar.

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

Act 2009:63 on Measures to Prevent Money Laundering and Terrorist Financing.

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Lawyers from other EU Member States may provide legal services in Sweden following the rules on freedom of movement of lawyers. If established in Sweden, the lawyers must be registered at the Swedish Bar Association. Such visiting or established foreign lawyers must adhere to the same anti-money laundering regulations as are applicable to Swedish lawyers.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

The Swedish Bar Association has issued guidelines to all members of the Swedish Bar on their obligations under the AMLA and the Third Directive. Other professional bodies have issued guidelines as well, and lawyers may also find these helpful when coming to terms with their obligations.

Guidelines from the Swedish Bar.

Website of the Swedish Financial Supervisory Authority, Finansinspektionen.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

The Swedish Bar Association is the competent authority to ensure general compliance of lawyers with existing regulations. This applies also to compliance with the AMLA. Failure to comply with the AMLA may therefore lead to a disciplinary offence before the Disciplinary Board of the Swedish Bar.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

A lawyer is under an obligation to ensure that clients establish their identity when a business relationship is entered into.

If a customer is a physical person, then the identification documents (passport, driving licence etc.) must include name, address and civil registration number, or other similar documentation if the relevant person has no civil registration number.

If the customer is a company the identification documentats must include name, address, CVR number (company registration number), or other similar documentation if the company has no CVR number.

Reasonable arrangements must be made to understand a company’s control structure and the beneficial owners must be identified.

The client relationship must be monitored on an on-going basis. Documentation and other information on the client must be updated on an on-going basis.

A lawyer/ law-firm can, under certain conditions, use and rely on information regarding a client obtained by another lawyer/law-firm and some other undertakers governed by AMLA.

If there is any doubt as to whether information previously received on an existing client’s identity is correct or adequate, new identification must be established. Lawyers can decide to carry out the identification procedure based on a risk assessment of the individual client or transaction. However, a lawyer cannot completely omit to obtain information on the identity of a client.

Furthermore, a lawyer is obliged to develop guidelines and instructions on:

Customer identification;
Reporting;
Filing registrations;
Internal control;
Risk assessment;
Risk management;
Management control and communication;
Educational programmes for employees to prevent money laundering and terrorist financing.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes, Sweden follows a risk-based approach to money laundering and terrorist financing. There are no hard and fast rules regarding the initial signs of criminal activity and Swedish regulators are obliged to correct any misapprehensions that firms might have.

Guidance for lawyers is given in the Guidelines issued by the Swedish Bar and by the Swedish Financial Supervisory Authority, Finansinspektionen (see above).

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Enhanced due diligence (chapter 2 Section 6-8 AMLA) is required whenever money laundering or terrorist financing seems more likely than usual.

Swedish law points inter alia to situations where:

The customer has not been physically present for identification purposes (“distance clients”);
Information on the identity of the client is insufficient, inadequate or deemed not reliable;
Any obscurity remains after ordinary due diligence;
Financial products or transactions which can facilitate money laundering or financing of terrorism are employed;
There are cross-border banking relationships with institutions outside the EEA;
The transaction or business relationship involves a politically exposed person (PEP).

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Yes. Chapter 2 Section 5 provides nine types of transactions for which the ordinary identity verification requirements are not required.

Examples of situations where exceptions can be made from the requirement of basic due diligence (simplified due diligence) are:

When the client is a Swedish authority;
A listed company situated within the EEA;
A listed company outside the EEA if anti-money laundering regulations and supervision are effectively in place;
Where the transaction involves life insurance and pension contracts of specific types as well as pooled accounts for client funds

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Yes. A possibility to rely on third party due diligence is stated in Chapter 2, Section 3, Para. 3 AMLA.

A lawyer/ law-firm can, under certain conditions, rely on information regarding a client obtained by another lawyer/law-firm and some other undertakers governed by AMLA. Among those are financial institutions licensed to do business within the European Union, within a country with which the European Community has entered into an agreement for expanding the financial area, or within a country not falling within the first two categories but imposes money laundering and terrorist financing laws similar to the Third EU Directive.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

According to Chapter 1 Section 3, Para. 1 AMLA a lawyer is subject to the anti money laundering regulations in the following cases:

When a lawyer, on behalf of their client and at the client’s expense, carries out a financial transaction or a transaction concerning real estate/property;
When a lawyer provides assistance in the planning or execution of transactions for their clients that involves:
1. The purchase and sale of real property or undertakings;
2. Managing their clients’ money, securities, or other assets;
3. Opening or managing bank accounts, savings accounts, or securities accounts;
4. Raising the necessary capital for the establishment, operation, or management of the undertakings; or
5. Establishing, operating, or managing undertakings.

According to Chapter 3, Section 1, Para 2 a lawyer has a duty to scrutinize transactions in order to detect suspicious transactions which can have connection to money laundering or financing of terrorism. If suspicion remains after a closer analysis/investigation of the transaction has been carried out, the lawyer has an obligation to report all information of potential money laundering or financing of terrorism without any further delay.

Furthermore, according to Chapter 3, Section 1 Para. 4, a lawyer is under an obligation, even without having any suspicion and upon request from the Swedish Finance Police, to report any information without delay which can be useful for an investigation on money laundering or financing of terrorism (see also below).

DOES ATTORNEY/ CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/ TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

A lawyer is exempted from reporting information that he receives from or obtains about one of his clients if it is in connection with:

Determining the legal position for the client;
Defending or representing the client in; or
Concerning, judicial proceedings, including advice on instituting or avoiding proceedings.

This applies regardless whether the information is received before, during or after such judicial proceedings or in connection with the relevant clients’ legal position. This is stated in Chapter 3 Sections 2 and 3 AMLA.

Furthermore, Chapter 36, Section 5 of the Swedish Code of Judicial Procedure sets limits on a lawyer’s obligation to act as witness in a court of law and also regulates situations where there is a prohibition to ask questions to a lawyer. A lawyer can, according to this rule, be forced to give up privilege information only when the suspicion concerns potential criminal acts which would be subject to a prison sentence of 2 years or more.

According to the Swedish Bar Association, this rule is of immediate importance when assessing the boundaries for reporting obligations under the AMLA.

For guidance how to deal with these kinds of situations from a client privilege and confidentiality perspective, please consult the Guidelines of the Swedish Bar Association p. 19-20.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Lawyers reporting clients enjoy indemnity. If the report is in accordance with the obligations of the AMLA, there will be no charges of breaching client confidence from reports subject to the AMLA. If the report is made without any cause and can be seen as manifestly unfounded, the lawyer could possibly face disciplinary sanctions.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

The AMLA does not require lawyers to resign from a mandate, but once a suspicious transaction report has been filed by a lawyer, he or she must immediately resign from the mandate according to the ethical professional rules of Swedish lawyers. This obligation is explicitly stated in the Code of Conduct for members of the Swedish Bar Association (rule 3.4.2 point 4). Consent for resigning from the authorities is not required.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.

Tipping off is no longer allowed. While there is no custodial sentence for tipping off, a fine may be imposed according to judicial discretion according to the AMLA.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

A new client is obliged to provide its name, address, national registration number (CPR number) or business registration number (CVR number).

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.

The client relationship must be monitored on an on-going basis. Documentation and other information on the client must be updated on an on-going basis.

If there is any doubt whether information previously received about an existing client’s identity is correct or adequate, new identification must be established. Lawyers can decide to carry out the identification procedure based on a risk assessment of the individual client or transaction. However, a lawyer cannot completely omit to obtain information on the identity of a client.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Reporting obligations for Swedish lawyers. Unfortunately, the third money laundering directive has - at a very late stage and beyond any possibility of influence for stakeholders at the Swedish Bar - been implemented with an extended reporting obligation for lawyers.

According to the new Act 2009:63 on Measures to Prevent Money Laundering and Terrorist Financing, enacted on 15 March 2009, a lawyer does not only have an obligation to give the Finance police information on suspicious transactions once reason for a report has arisen, but also at times when the lawyer does not even have any suspicions such as upon request from the police.

Thereby information can be requested from a lawyer also upon suspicion from the police or a third party.

However, there must be sufficient facts to support the suspicion (the suspicion must be of a concrete character) and “fishing expeditions” are not allowed.

The Swedish Bar maintains the opinion that this is an unacceptable enlargement of the reporting obligation and that this obligation goes beyond the Directive (Article 22 1b). Only a handful of States have gone this far in its implementation of the directive.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

According to the knowledge of the Swedish Bar Association, no money laundering cases have been pursued in relation to Swedish lawyers. However, there are a small number of cases where lawyers have been prosecuted in relation to other types of economic criminal offences.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?

Yes. The Financial Action Task Force conducted a mutual evaluation report on Sweden on 17 February 2006. The findings stated that the FATF was unhappy with the infrequent reporting of suspicious transactions and want the authorities to investigate and prosecute a larger quantity of serious money laundering cases. Furthermore, the report recommended that the procedures for ascertaining information relating to a beneficial owner be strengthened.

A further mutual evaluation report on Sweden is expected within the near future.

Information provided by:

Mr. Johan Sangborn
Acting General Counsel
Head of International Department
The Swedish Bar Association
Laboratoriegatan 4
Box 27321
SE-102 54 STOCKHOLM, SWEDEN
Tel. +46 8 459 03 00
Fax. +46 8 660 07 79
www.advokatsamfundet.se

RELEVANT NEWS

05/02/2009 - Sweden: Implementation Update.

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