Sounding the alarm: Money laundering in companies is out of control
Christian Lynne Wandt, expert in tackling financial crime, at PA Consulting commented on the problem of money laundering in Sweden in an article in Dagens Industri.
The article highlights how criminals who launder money through companies have a high chance of getting away with it. Only one in twenty reports of money laundering from banks relate to companies. Several sources say that banks prioritise providing a seamless service over controls.
Christian says this reflects the way "Everyone is in fierce competition to be the easiest bank to deal with."
Data consistently shows that organised crime has an increasing turnover with estimates that well over SEK 100 billion is laundered every year in the Swedish financial system alone. The article explains that some of the problem lies in which account holders are reported to the police – and which ones don't get attention. Last year, just over 37,000 cases of suspected money laundering were reported, most of which concerned private individuals rather than business accounts. But the figure should have been significantly higher if the reports had reflected the real levels crime, according to Linda H Staaf, head of the police's intelligence department. Police information often shows suspects have done business through companies but this is not reported.
One of the reasons for this is that the systems for identifying suspicious transactions would be disruptive if used on corporate accounts which often receive large payments. Christian explains,”In the fierce competition for corporate customers, banks often compete to be "agile", and "The result will be that the bank's employees go in with guns blazing to request detailed customer data from individual private customers while unknowingly letting through extensive money laundering in corporate accounts."
Christian says that to comply with money laundering rules, banks would need to carry out more in-depth checks. "The systems banks use mainly monitor individual transactions but do not place these in a larger context, such as unusual changes of owners and board members or strange connections to other businesses. That makes it difficult to find money laundering".
Christian is sceptical that banks will voluntarily change their ways of working. Instead, he believes in tougher government oversight, saying "It would make a big difference if the Swedish Financial Supervisory Authority required banks to invest in new technology to find and stop money laundering, rather than pressuring the banks to produce policy documents and to monitor every single private customer in detail."