Swedish Authorities Label Crypto Exchanges as Money Launderers

The Swedish Police Authority and Financial Intelligence Unit (FIU) have taken a bold step by classifying cryptocurrency exchanges as 'professional money launderers (PML).'

This decision follows a thorough analysis of services provided by unlicensed and illegal providers. The FIU's investigation identified that these PMLs have criminal links, enabling several individuals and criminal networks to launder money systematically.

According to FIU Sweden, PMLs can be categorized into four distinct profiles. These are the node exchange provider, the hawala exchange provider, the asset exchange provider, and the platform exchange provider.

Each profile represents a different method of conducting illegal activities, which pose a serious threat to the financial ecosystem.

Plans for Monitoring Crypto Exchange Services

The report emphasized the need for greater law enforcement involvement on crypto trading platforms. This move aims to curb illegal services effectively.

The FIU Sweden stated, 'Illicit cryptocurrency providers are an emerging threat within money laundering schemes and crucial for organized crime to maintain and expand their criminal markets.'

The authorities also acknowledged the role of licensed and legitimate crypto trading platforms. Without criminal intent, these platforms are seen as partners in curbing money laundering activities.

They urged these entities to observe their users' suspicious trading patterns and take necessary action, including stopping transactions and offboarding clients.

Sweden's Ongoing Crackdown on Illegal Crypto Activities

Swedish authorities have targeted the nation's Bitcoin mining community in a broader crackdown on illegal cryptocurrency-related activities.

The Swedish Tax Agency, Skatteverket, recently investigated the operations of 21 crypto-mining firms between 2020 and 2023. The investigation uncovered several ambiguities in their tax filings.

The findings revealed that 18 crypto-mining firms had filed ' misleading or incomplete' information to avoid paying value-added tax (VAT) on taxable operations.

The agency stated that this approach led to tax disappearing from the country in the form of incorrect input VAT payments, unpaid output VAT, and unreported crypto assets.

The crypto mining firms appealed against the $90 million tax demand to the administrative court. Out of these, the appeals of two mining firms were accepted, and the court stated that 'the amounts above have been adjusted about the verdicts.'

Future Outlook

As Sweden intensifies its efforts to regulate cryptocurrency, the focus remains on eliminating illegal operations while supporting legitimate businesses.

The authorities' stringent measures aim to create a safer and more transparent environment for all stakeholders involved in the cryptocurrency ecosystem.