In a memorandum from the Ministry of Finance, the Government proposes that the performance of financial activities without a licence or registration from the Swedish Financial Supervisory Authority should be criminalised through the introduction of a new Act on penalties for unlawful financial activities. It is proposed that the new Act should enter into force on 1 October 2025.
The proposal includes all activities that are subject to a licence or registration requirement, such as banking and insurance business, as well as fund and payment service activities. Under the proposal, anyone who, either intentionally or due to negligence, carries on such activities without the necessary licence or registration could be sentenced to a fine or a maximum of two years’ imprisonment. If the crime is considered serious, the sentence will be a minimum of six months and a maximum of six years’ imprisonment. The proposal does not aim to criminalise minor offences, but is focused on attempt, preparation and conspiracy to commit serious crime. However, a prosecution may not be brought if the act in question has already been the subject of a ruling by the Financial Supervisory Authority regarding an administrative penalty or an application regarding imposition of a fine.
As the memorandum notes, criminalisation risks inhibiting innovation and restricting access to certain products and services. In cases in which it is not clear whether a licence or registration obligation exists, the risks increase significantly for companies that choose not to apply for a licence or register. That effect is certainly not intended, but cannot reasonably be discounted in view of the very general wording of the penalty regulation. However, the memorandum notes that a licence or registration obligation already applies to the performance of financial activities, which is why further far-reaching regulations should not have any “noteworthy undesirable effects”. Furthermore, the protective interest in countering criminal activities (in the form of money laundering and terrorist financing, for example) is considered to weigh in favour of criminalisation.
Many companies’ activities are difficult to attribute to a specific financial activity, which leads to a great deal of uncertainty and to problems with boundaries when it comes to establishing whether the activity must be considered to be subject to a licence or registration. The new proposal on criminalisation highlights and reinforces the importance of carefully analysing activities in relation to applicable regulatory requirements.
The memorandum also touches on the solution that, it appears, could rectify a large part of the problem, i.e. introduction of a system of advance information from the Financial Supervisory Authority regarding a possible licence or registration obligation for an activity – a system that is already in place in the area of insurance. However, it is noted that such a proposal would fall outside the scope of the legislative case. However, it seems rather strange for a solution to a highly foreseeable problem to be identified and then disregarded for reasons that appear to be somewhat bureaucratic.
The memorandum is available to download from the Government’s website.
In connection with this, the Government has also proposed that currency exchange, all activities in the form of money transfers and the issue of electronic money should be subject to a licence requirement instead of the registration requirement that applies in certain cases under the current rules. Account information service providers will nevertheless also continue to be exempt from the licence requirement in future.
