Klarna Fined $45.6 Million by Swedish FSA for Money Laundering Rule Breaches

Sweden’s Financial Supervisory Authority (FSA) has imposed a fine of 500 million Swedish crowns ($45.59 million) on Klarna Bank for breaching money laundering regulations.

The decision followed a review of Klarna’s operations covering the period up to March 2022. The investigation uncovered significant shortcomings, including an inadequate assessment of how the company’s services could potentially be exploited for money laundering or terrorist financing activities.

Klarna, a prominent buy now, pay later firm, is widely anticipated to go public next year. In preparation for this move, the company disclosed last month that it had filed paperwork with the U.S. Securities and Exchange Commission for an initial public offering.

Despite the identified deficiencies, the FSA clarified that the breaches were not severe enough to justify a formal warning or the withdrawal of Klarna’s banking licence. “We have concluded this investigation as of today,” said Erik Blommé, Director of Money Laundry Supervision at the FSA, in a statement to Reuters.

Blommé explained that while no specific deadline was set for addressing the issues, the regulator expects Klarna to rectify the deficiencies promptly. “This is not an injunction so there is no specific timeframe … but we expect Klarna to remedy the deficiencies in an expedient manner,” he added.

Klarna, which obtained its banking licence in 2017, responded to the fine by emphasizing that the FSA’s findings were part of a routine review process and were not related to any actual instances of money laundering. “We have maintained constructive dialogue throughout this process which is part of our commitment to a robust and secure financial environment,” a Klarna spokesperson stated.

This incident is not the first time Sweden’s FSA has scrutinized payments firms. In 2021, Trustly, another Swedish financial company, received a warning from the regulator. The fallout led to Trustly abandoning its planned $11 billion initial public offering.

The fine serves as a stark reminder of the regulatory hurdles financial technology firms must navigate as they expand their operations and prepare for public listings.

By fLEXI tEAM