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On July 1, 2025, Sweden changed its approach to regulating the payments ecosystem by repealing the light-touch registration exemptions for registered payment service providers (PSPs) and registered electronic money issuers (EMIs) under the Payment Services Act (2010:751) and the Electronic Money Act (2011:755).
Under the new framework, most operators, except those offering only account information services, will require full licensing by the Swedish Financial Supervisory Authority (Finansinspektionen — FI).
This change could be seen as Sweden’s attempt to strengthen oversight, mitigate money laundering risks and improve the financial system's integrity.
The Bigger Picture
The Swedish authorities in the Coordination Function for measures against money laundering and terrorist financing (led by the Swedish Policy Authority) initiated the changes to the Payment Services Act and the Electronic Money Act to address the risk of alternative payment systems being used for money laundering and terrorist financing, as outlined in the 2022 national risk assessment. According to the risk assessment, currency exchange companies and registered PSPs, such as money transmitters, are considered to have a central function in criminal networks’ reinvestment in criminal activities and laundering of criminal proceeds in Sweden. To try to counteract this issue, the risk assessment proposed that the registration requirement for natural and legal persons carrying out activities in the form of money transfers and currency exchange should be replaced by a licensing requirement. Under the previous registration requirement, which essentially exempted registered payment service providers and registered issuers of electronic money from licensing requirements, these entities were not required to provide as much information about their business and activities as licensed entities. With the adoption of Bill 2024/25:67 on measures against abuse of alternative payment systems in March 2025, which proposed that currency exchange, payment services and the issuance of electronic money should be subject to a licensing requirement instead of a registration requirement, the registration requirement was repealed.
By removing the licensing exemptions for what are essentially small payment institutions and small e-money institutions prescribed in Article 32 of the revised Payment Services Directive (PSD2), Sweden is stepping away from the norm and exercising its discretion on how PSD2 is implemented in each member state. Although Sweden has not outright eliminated the small payment institution exemption, it has effectively constrained the exemption’s practical reach. Only account information service providers (AISPs) remain under the registration requirement, and are now included within the scope of the Act on Measures Against Money Laundering and Financing of Terrorism. The shift signals a broader push for greater transparency, oversight and risk management, reflecting Sweden’s emphasis on safeguarding financial integrity.
Sweden stands out among EU member states for its rapid transition towards a full licensing framework. The process of proposing, passing and implementing the bill that brought about the change took only around four months, demonstrating a very decisive approach. Unlike other member states that maintain a light regime for small payment and e-money institutions, Sweden is narrowing it significantly, diminishing competitive flexibility for small entities, while also attempting to strengthen the integrity of the financial market from financial crime risks.
Why should you care?
Sweden’s decision to rescind the application exemptions for registered PSPs and registered EMIs will result in a more rigorous application process for these entities that would have otherwise benefited from the exemption.
This regulatory change will lead to:
- Stronger regulatory oversight and security, as the new framework will empower the FI to enforce stricter oversight in helping to combat illicit activities such as money laundering and terrorist financing.
- An increased compliance burden for entities now subject to the licensing requirement, as it will require robust internal controls, documentation, anti-money laundering systems and ongoing reporting, which may raise operational costs and complexity, especially for smaller entities.
- A reduction in market diversity due to the heightened regulatory hurdles, which could potentially squeeze out smaller entities and reduce consumer choice.
- There will be a bigger market reach beyond Sweden, as entities with a full licence will now be able to benefit from the passporting regime. Entities that operated under the exemption regime were prohibited from passporting into other EU member states.
As a result of the regulatory change, under the transitional provisions of both the Payment Services Act and the Electronic Money Act, registered PSPs and registered EMIs that had been granted an exemption from the requirement to obtain a permit before July 1, 2025, may continue their operations until December 31, 2025. After the transition period, if a registered PSP or EMI applies for a licence to the FI before January 1, 2026, the company may continue its operations until the FI has finally examined the application.
To prepare for the end of the transition period, registered PSPs, registered EMIs, and other small payment institutions and e-money institutions in Sweden should:
- Make sure they understand the regulatory change and how it will affect them.
- Assess their current status and how it compares to the requirements of a full licence application, considering initial capital requirements, AML/CTF controls, reporting requirements and passporting requirements.
- Start building licensing readiness by preparing:
- Documentation, including a business plan, programme of operations, AML/CTF policies and safeguarding mechanisms, among others.
- Personnel by appointing key function holders, such as compliance officers, risk officers and money laundering reporting officers, depending on the entity's requirements.
- Engage early with the FI, which encourages entities to email finansinspektionen@fi.se with any queries or questions.
- Prepare operationally by strengthening internal controls, upgrading any IT systems, particularly those used for transaction monitoring, customer due diligence requirements and fraud detection, and ensuring that all staff are trained on the new regulatory obligations.
Sweden’s decision to eliminate the registration exemption represents a substantial intensification of oversight within its payment ecosystem. Although this can be seen as a positive step towards greater financial security and transparency for consumers, it will raise the compliance bar and associated costs, which could present particular challenges for smaller entities, potentially deterring them from entering the market. It may result in a leaner, more secure payments ecosystem; however, there will likely be fewer players.
