Neobankers, which offer similar services to traditional banks but are entirely digital, have increased in number over the past few years. At the end of last year, there were around 30 neobankers under the supervision of the Financial Supervisory Authority, according to the police.
"The simplicity, speed, and anonymity that some neobankers offer with their services make it easier for criminals to launder, hide, and wash criminal profits. This leads to neobankers risking becoming an increasingly common tool in criminal activity," says Annie Frohm, chairman of the Coordination Function, according to a police press release.
Easy to forge
A vulnerability, according to the report, is how people are supposed to prove that they are who they claim to be. At some neobankers, only verified copies of an ID document and a photo of oneself are required.
"Since it is easy to forge ID documents, customers can bypass the so-called verification process, creating many opportunities to exploit others' identity documents and use account holders," writes the police.
What is required for the supervisory authority to take action?
Licenses can be revoked
Petra Bonderud, unit manager at the Department of Money Laundering Supervision, notes that the Financial Supervisory Authority primarily works preventively, urging these digital banks and payment institutions to follow anti-money laundering regulations. However, inspections are also conducted.
Risks associated with neobankers are something we have identified as a prioritized area, she says, mentioning that the authority has a few such cases under review.
If the rules are not followed, it can ultimately lead to the license being revoked.
In the report, the National Risk Assessment for 2023/2024 by the Coordination Function, several recommendations are made for how authorities can better prevent banks from being exploited. This includes Sweden working to ensure that e-identification is used as much as possible in the EU to verify customers.
