Leading buy-now-pay-later service provider Klarna has been found in breach of Sweden’s anti-money laundering regulations.
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Sweden’s Financial Supervisory Authority, known as the FI, announced the 500 million kronor ($45.5 million) administrative fine on Swedish fintech Klarna today.
The announcement follows an investigation that began in April 2022, which revealed compliance failures between April 2021 and March 2022. The FI said it found no actual cases of money laundering, but said the company’s general risk assessment had “significant deficiencies” and ignored how the fintech’s products and services could be used for money laundering and terrorist financing purposes. Its consumer due diligence and model risk management procedures were also found to be ineffective.
“It is important to counteract the risk that the firm's operations could be used by criminals,” Daniel Barr, the regulator’s director-general said. “There are therefore grounds on which to intervene against the bank.”
The FI said Klarna’s violations did not demand an official warning or the withdrawal of its authorisation.
A Klarna spokesperson told Lexology PRO that it was still reviewing its options regarding an appeal.
In its official response, Klarna did not reject the investigation or question the administrative fine, while saying it took its AML and counter terrorist financing responsibilities “very seriously”.
It maintained it had engaged with “constructive dialogue” during the “routine” investigation. Klarna says it was the largest Swedish bank that had not yet been investigated aside from state-owned SBAB when the FI probe into its AML procedures began.
“The industry navigates a complex set of regulations, which is also demonstrated by the fact that all other major banks have received reprimands within the framework of money laundering regulations,” Klarna said.
In November, Klarna announced it had confidentially submitted a draft registration to the US Securities and Exchange Commission for an initial public offering, in a blow to the London Stock Exchange.
The buy-now-pay-later giant’s popularity exploded during the pandemic, when consumers increasingly capitalised on the option to pay for products – primarily fashion – in interest-free instalments, while making online purchases.
But its valuation slumped from $46 billion to $6.7 billion in fundraising drives in 2021 and 2022, amid tightening regulation.