Sweden Classifies Some Crypto Exchanges as ‘Professional Money Launderers’

The Swedish Police Authority and the Financial Intelligence Unit (FIU) have finalised the classification of crypto exchanges in the country.

Written by Radhika Parashar, Edited by David Delima | Updated: 24 September 2024 16:38 IST

Sweden Classifies Some Crypto Exchanges as ‘Professional Money Launderers’

Photo Credit: Pixabay/ Sergei Tokmakov

The demand for crypto exchange services is very high among criminals, the Swedish authorities say

Highlights

The crypto sector is largely unregulated in Sweden
Sweden has also taxed crypto-related gains
Sweden is part of the EU, where the MiCA rules govern the crypto sector

Sweden has classified some crypto exchanges and crypto-related service providers as 'professional money launderers' claiming that these platforms are often used by criminals to launder proceeds from all types of crimes via cryptocurrency. In the official notice, the authorities have identified four types of crypto exchanges that have been designated as professional money launderers (PMLs). The Swedish Police Authority and the Financial Intelligence Unit (FIU) of Sweden have collectively finalised this classification of crypto exchanges in the country.

In a report compiled by Sweden's FIU, the authority states that the ability to launder large volumes of assets between crypto wallets internationally, without the oversight of an intermediary, has drawn criminals towards the crypto sector.

“The assessment from FIU Sweden is that there is an increasing demand for PML from organised crime and that the services they provide are pivotal for the criminal economy,” the report said. “There are also individual crypto exchange providers that are more tightly connected to criminal networks, who do not typically advertise their services publicly.”

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The Swedish authorities have divided illegal crypto exchanges (and those operating without a licence) into four profiles, outlining the different ways they are being exploited by criminals — node exchange providers, hawala exchange providers, asset exchange provider, and platform exchange provider.

Under the first two categories, Sweden blames crypto exchanges for playing a crucial role in maintaining the criminal economy while also harbouring underground banking networks. In the other two categories, the authorities there claim illicit businesses related to cryptocurrencies are also giving criminals ways to launder their unlawful funds.

“Crypto exchange providers in the form of PMLs can accommodate a diverse client base. The demand for crypto exchange services is very high among criminals, which suggests that the use of cryptocurrency is widespread within the criminal arena. By fueling the criminal infrastructure, the crypto exchange provider is part of a larger context. Their services support influential criminals in organised crime, thus helping to finance the spiral of violence and other serious crime,” the report noted.

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Sweden reportedly considers cryptocurrencies such as Bitcoin taxable financial instruments. At present, the crypto sector is largely unregulated in the country.

The country is part of the European Union (EU) — and the bloc has already deployed a comprehensive set of regulations to govern the crypto sector called the MiCA framework. Sweden has suggested crypto trading platforms adhering to the MiCA laws to be very observant of any unrecognised patterns of trading on their client's wallets.

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Further reading: Cryptocurrency, Sweden, Crypto Rules, Professional Money Launderers

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More