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The payment service providers (PSPs) are being investigated by Sweden’s Finansinspektionen (FI) over how they operate their money laundering systems, following investigations earlier this year into other PSPs.
Klarna, one of Europe’s largest fintechs, and cash handling company Loomis, are being probed by the Swedish Financial Supervisory Authority as it warns that PSPs are vulnerable to money laundering abuse.
“In both the EU and the national risk assessment, companies offering payment services are considered to pose a significant risk of money laundering and terrorist financing,” said the regulator.
“FI will therefore examine how a number of companies that offer different forms of payment services follow the money laundering rules.”
The investigation will focus on the companies’ general risk assessment, risk assessment of customers and measures for customer awareness.
The watchdog appears to have been jolted into action after concerns about two other companies — Clearon and Trustly.
These two companies had been issued warnings and made to pay penalty fees for major shortcomings in their work to counter money laundering.
“We know that this type of company is particularly vulnerable to money laundering,” said Petra Bonderud, deputy head of money laundering supervision at the FI. “Therefore, it is important that they have proper routines and processes so that they avoid being exploited by criminals who want to launder money.”
Bonderud warned, referring to the new investigation: “We start with these two companies, but more companies may be included in the review.”
Other significant payments companies that are headquartered in Sweden include Zettle, which is owned by PayPal and is a mobile point of sale (mPOS) payments facilitator, as well as Swish, the popular banking and payments app that is used by 5.8m consumers.
At a conference this month, Klarna's boss said that the EU's know your customer (KYC) and anti-money laundering (AML) requirements are the “worst regulation ever created”.
“It is so prescriptive, it is poor, it doesn’t serve its purpose,” he continued, pointing out that a lot of the regulation that has come out of Brussels has been similar to this.
