Swedish Regulators Fine $46 Million to Klarna Bank for Breaching AML Regulation

Swedish’s Financial Supervisory Authority (FSA) has imposed a penalty of 500 Million Swedish crowns ($ 46 million) on Klarna Bank for breaching money laundering regulations.

FSA’s investigation, which concluded for the year March 2022, analyzed deficiencies in the risk assessment process in Klarna Bank that could cause illegal activities such as money laundering or terrorist financing.

The regulator also said the leading “buy now pay later” (BNPL) service provider firm, doesn’t have comprehensive procedures & guidelines for conducting due diligence measures on clients that use bank invoice products, stated media sources.

Despite the penalty, the FSA also announced that violations weren’t severe enough to withdraw bank authorization and issue a formal warning.

In 2021, Trustly, another Swedish payment firm, also received a warning from the FSA that prompted the company to withdraw an $11 billion planned IPO.

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Regulatory Scrutiny Can Impact Klarna’s IPO Plan

This regulatory fine can cause immense pressure on the bank because “Klarna” is gearing up for an “initial public offering” (IPO) in the United States (U.S.) next year and recently filed paperwork with the U.S. Securities & Exchange Commission (SEC), stated media sources.

This regulatory scrutiny can be challenging for Klarna to publish a risk mitigation strategy that will secure the bank’s regulatory compliance and operational resilience.

“We have maintained constructive dialogue throughout this process which is part of our commitment to a robust and secure financial environment,”

Klarna spokesperson

According to a media report, Klarna quickly addressed the case finding and announced that this investigation was just a routine compliance check and that the bank wasn’t involved in a money laundering case.