Sweden Probes Crypto Exchanges’ AML Practices

October 26, 2021
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The Swedish Financial Supervisory Authority (Finansinspektionen) has opened an investigation into two leading cryptocurrency exchanges as it believes these types of entities are particularly exposed to the risk of being exploited by criminals.

The Swedish Financial Supervisory Authority (Finansinspektionen) has opened an investigation into two leading cryptocurrency exchanges as it believes these types of entities are particularly exposed to the risk of being exploited by criminals.

Last week, the Finansinspektionen (FI) announced an investigation into two Sweden headquartered exchanges, Safello and Goobit, which offer cryptocurrency trading services for European customers.

According to the announcement, the agency has concerns that various characteristics of virtual currencies make this type of payment instrument “particularly attractive” for criminals. These concerns stem from the agency's understanding that virtual currency payments are settled fast and have limited transparency, the assets flow across borders without the need for a central counterparty, and they provide some degree of anonymity, the authority explained.

It believes virtual currency exchanges are particularly important in the fight against money laundering, as they are the market players that exchange virtual assets for fiat money.

These companies act as a bridge between a sector with a high risk of money laundering and the traditional financial system, said Åsa Thalén, head of the money laundering supervision department, adding that it is crucial that these entities are well equipped to counteract the risk of being used for both money laundering and terrorist financing.

Similar to the UK, cryptocurrency exchanges operating within Sweden are required to register with the FI and comply with the country’s money laundering regulations.

Following the announcement, Goobit issued a press release, stating that the company welcomes the investigation as regulation and supervision are important prerequisites for the crypto industry's maturity and wider acceptance in society. It explained that the investigation is part of a wider national initiative that aims to make a general risk assessment of virtual currencies.

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