Background and purpose
At present, conducting financial activities without a licence or registration is not subject to criminal sanctions. The current regulatory sanction is that the Swedish Financial Supervisory Authority shall order anyone who conducts activities that require a licence or registration to cease the activity or order it to apply for authorisation or registration. An actor can thus operate "in secret" and take a chance that Finansinspektionen does not take note of the financial activities.
Even though there is a lack of criminal sanctions, there are certainly other risks associated with conducting financial activities without authorisation or registration, such as reputational risk, loss of the opportunity to obtain authorisation or registration in the future, invalid contracts, liability to third parties and increased risk of companies being exposed to money laundering.
In a memo published by the Swedish Government, a new law is proposed on criminal liability for illegal financial activities.
The memo aims to strengthen the regulatory framework for financial activities and ensure that activities that are subject to requirements for authorisation or registration are conducted in accordance with the provisions of the Act.
The proposed amendments are proposed to enter into force on 1 October 2025.
The current system has proven to be inadequate in sanctioning illegal activities, which can damage the stability of the financial market and reduce trust in the financial sector. The new offence is described as illegal financial activity (Sw. finansiell verksamhet utan tillstånd).
Furthermore, it is proposed that secret coercive measures may be used in a preliminary investigation regarding serious illegal financial activity and that the law enforcement authorities should be licenced to obtain certain information under the so-called Acquisition Act (Sw. Inhämtningslagen) to prevent or detect serious illegal financial activity. The memo also proposes a regulation that enables Swedish Customs to control the import and export of cash at the border with other EU countries.
New penal provision: Illegal financial activities
The central part of the memo is the introduction of criminal liability for those who conduct financial activities without a licence or registration. The provision is proposed in two degrees:
- The normal degree refers to violations of the requirements for a licence or registration where the act is not considered minor. The scale of punishment is proposed to be a fine or imprisonment for a maximum of two years.
- A serious crime is applicable if the violation is of a particularly serious nature, for example if it has involved large sums of funds, has been extensive, or if the offender has acted with recklessness. The scale of punishment is proposed to be imprisonment for a minimum of six months and a maximum of six years.
- For minor violations, no criminal liability is proposed, considering the principle of proportionality and that resources should be used where they are most useful.
In the case of serious illegal financial activity, it is proposed that attempts, preparation and incitement/conspiracy should also be punishable, to enable early intervention against organised crime.
Use of secret coercive measures
To facilitate investigations of serious cases of illegal financial activity, it is proposed that secret coercive measures may be used. This includes:
- Secret interception and surveillance of electronic communications to gather evidence of large-scale and organised activities.
- Secret camera surveillance and room tapping in case of suspicion of serious crimes.
In addition, it is proposed that law enforcement authorities shall be permitted to use the measures stated in the Secret Data Reading Act (Sw. lagen om hemlig dataavläsning).
Swedish Customs' expanded powers
A further proposal in the memo is to strengthen the control of cash at the EU's internal borders. This means that Swedish Customs will have the opportunity to carry out controls that currently only apply at the border with third countries.
- Cash with a value of at least EUR 10,000 that is transferred across borders between Sweden and other EU countries will be subject to notification and reporting requirements.
- Swedish Customs is given the right to temporarily detain cash to ensure that the obligation is complied with and to investigate any violations.
It is proposed that breaches of the reporting and accounting obligations may lead to fines.
Justification
The memo emphasizes the importance of the regulation to:
- Protecting the financial market. Illegal activities can undermine competition and trust in law-abiding financial services actors.
- Combating money laundering and terrorist financing. Regulating activities used to conceal or trade illicit assets strengthens society's protection against financial crime.
- Streamline supervision. The proposed sanctions complement Finansinspektionen’s administrative sanctions system and help prevent illegal activities from being established.
Reflection
The proposed measures stated in the memo are an important step to ensure that the Swedish financial market remains safe and transparent. By introducing criminal liability and providing authorities with strengthened tools, the proposals contribute to maintaining confidence in the Swedish financial market.
