Sweden’s biggest fintech, Klarna, has been issued a substantial fine by the country’s Financial Supervisory Authority (FI) for breaching anti-money laundering (AML) rules.
The company, best known for its BNPL activity, has been charged SEK 500 million (€433.9m/$456.1m) for failing to comply with AML regulations between April 2021-March 2022.
Compliance failures related to general risk assessment and customer due diligence policy requirements. The FI states that the violations were serious enough that there could be grounds to issue Klarna a warning or ‘withdraw its authorisation’, but opted for a SEK 500m fine based on the firm’s financial position.
“The anti-money laundering regulations must be followed. It is important to counteract the risk that the firm’s operations could be used by criminals,” said Daniel Barr, FI Director General.
“Our investigation shows that Klarna has not followed the requirements on, among other things, a general risk assessment and procedures and guidelines for due diligence measures. There are therefore grounds on which to intervene against the bank.”
Klarna’s risk assessment was found to have ‘significant deficiencies’ such as an absence of assessments of how the firm’s products and services could be used for money laundering or terrorist financing.
Additionally, the FI also states that Klarna had no procedures or guidelines in place, which captured ‘all situations for when due diligence measures should be taken’ for customers using its invoice product.
Though a SEK 500m fine is of course a substantial sum of money, it shouldn’t prove too much of a hindrance to Klarna’s ambitions in banking and fintech. The company has enjoyed considerable success over recent years, reporting year-over-year revenue growth of 29% to SEK 6.4bn (€558m) in its last trading update.
The company recently opted to list on the NYSE as it continues to unlock more investment and growth opportunities in the high-value US market.
While the warning and fine will not slow down its impressive growth, it will likely make the firm more aware of the importance of sticking to rigorous compliance requirements across the many markets it operates in – particularly due to its leading position in BNPL, a sector that has caught a lot of regulatory attention of late.
