Swedish authorities have intensified their scrutiny of cryptocurrency exchanges, labeling some as “professional money launderers (PML)” due to their involvement in facilitating organized crime. According to a recent report by the Swedish Police Authority and the Financial Intelligence Unit (FIU), unlicensed and illegal cryptocurrency exchanges are being used systematically to launder money across multiple criminal networks.
The FIU has identified four distinct profiles of PMLs based on their operational characteristics: the node exchange provider, the hawala exchange provider, the asset exchange provider, and the platform exchange provider. These classifications outline the varying methods by which illegal crypto exchanges enable illicit financial activities.
Swedish law enforcement is now calling for increased monitoring of cryptocurrency trading platforms to disrupt the services of these illegal operators. “FIU Sweden assesses illicit cryptocurrency providers as an emerging threat within money laundering schemes and a crucial part for organized crime to maintain and expand their criminal markets,” the report states.
Despite the crackdown on illegal crypto activities, Swedish authorities recognize the role of licensed exchanges in curbing money laundering. Legitimate platforms have been urged to monitor suspicious transactions and take appropriate action, such as freezing transactions or offboarding high-risk clients.
The growing concern over illegal crypto exchanges follows Sweden’s broader efforts to target illicit activities in the crypto space, including the recent focus on Bitcoin mining operations. Between 2020 and 2023, the Swedish Tax Agency investigated 21 crypto mining firms, uncovering discrepancies in tax filings from 18 firms. The agency claims these companies provided misleading or incomplete information to evade value-added taxes (VAT), leading to a $90 million tax shortfall. While some firms have appealed the decision, Swedish authorities remain committed to addressing these issues.