Sweden Considers Crypto Exchange Providers As Professional Money Launderers

In a recent publication, the Swedish authorities have labeled certain crypto exchanges as major enablers of organized crime based on their specific characteristics.

This move follows an in-depth analysis of crypto-related services offered by unlicensed and illegal individuals.

The Swedish Police Authority, Financial Intelligence Unit Classified Crypto Exchanges As Professional Money Launderers

According to a recent publication by the Financial Intelligence Unit (FIU) Sweden, Swedish Police Authority’s National Operations Department, crypto exchange providers have been classified as ‘professional money launderers (PMLs).’

The article, which was published on Monday, September 23, 2024, named unlicensed and illegal crypto exchange providers as the major enablers of organized crime, which includes money laundering.

In the article, the FIU mentioned that these professional money launderers have criminal links and networks and have enabled several people to carry out money laundering systematically.

When analyzing the characteristics of PMLs, FIU Sweden categorized them into four subgroups, namely:

• the node exchange provider, 
• the Hawala exchange provider, 
• the asset exchange provider, and 
• the platform exchange provider.

Plans To Curb Illegal Services On Cryptocurrency Exchange

The article called for the greater presence and involvement of law enforcement agents on cryptocurrency exchange providers as a means to curb illegal services, noting that illegal crypto exchanges are key to maintaining organized “money laundering” crimes and “expanding criminal markets.”

However, the article also mentioned that the Swedish authorities recognized the role played by legitimate and licensed cryptocurrency exchanges in curtailing money laundering activities. 

Swedish authorities encouraged such legitimate and licensed crypto platforms to continue to monitor and report any suspicious trading pattern observed in any of its users and to take necessary actions, such as offboarding such users or stopping the transactions.

Sweden’s Effort To Regulate The Cryptocurrency Industry

Sweden is currently targeting the country’s Bitcoin (BTC) mining community in an ongoing clampdown on illegal crypto-related activities. 

The Swedish Tax Agency probed into the operations of 21 cryptocurrency mining firms between 2020 and 2023 and found out that most of them are not regular with their tax filings. 

The probe revealed that out of the 21 crypto miners, 18 filed “incomplete or misleading” information so as to evade VAT payment on taxable operations. 

The Swedish Tax Agency said that these illegal acts have led to tax disappearance from the country through “unreported cryptocurrencies, unpaid output VATs, and incorrect payments of input VATs.”

As a result of this, the Swedish Tax Agency has demanded about $90M in unpaid taxes from these 18 cryptocurrency mining companies.

However, the 18 miners have individually filed with the administrative court to appeal against the $90M tax demand.

Only two of the filed appeals were accepted, and the administrative court announced that the initial tax demand for the two mining firms had “been adjusted with regard to the verdicts.”

In other news, Binance co-founder Changpeng ‘CZ’ Zhao would end his jail term at the Federal Correctional Institution Lompoc facility in California on Sunday, September 29. 

CZ was sentenced to four months imprisonment in April for money laundering charges and would end his prison term this coming Sunday.