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Swedish FSA reprehends Klarna's failure to mitigate money laundering risks

Tuesday 10 September 2024 15:35 CET | News

AI-enabled global payments network and shopping assistant Klarna has been criticised by the Swedish Financial Supervisory Authority for not advancing its money laundering prevention procedures. 

Following a preliminary assessment, the Swedish Financial Supervisory Authority (FS) concluded that Klarna breached several regulatory requirements, with the regulator mentioning this in a redacted letter sent to the company’s representatives in July 2024 and seen by the local newspaper Dagens Industri. As part of the letter, the FSA covered a minimum of six provisions in the Money Laundering Act, including a general risk assessment, risk assessment of customers, and Know Your Customer rules. Additionally, it concentrated its attention on the requirements for improved customer awareness procedures if a user was thought to be associated with a high risk of money laundering.

Klarna faces criticism over failure to mitigate money laundering

The announcement tracks Klarna’s preparations for an Initial Public Offering (IPO) in 2025 after its revenue scaled 27% in the first half of 2024, as per the company’s information. When asked to comment on the news, Klarna declined to provide any information to Dagens Industri on how the FSA’s assessment might impact the expected timeline. In addition, the company refused to give a statement when contacted by Bloomberg, with it mentioning its plans to communicate a decision when it has one.

Moreover, the FSA is now set to investigate whether these are grounds to intervene against Klarna and how that should be proceeded.

Klarna’s public IPO

The current news comes shortly after Klarna’s announcement regarding its progress in selecting Goldman Sachs for its IPO in the US. The development, in which the company’s IPO was expected next year, coincided with Klarna’s discussion with investors when it came to a potential sale of existing shares ahead of the IPO. Despite initially considering targeting a valuation of nearly USD 200 billion, these plans were still under assessment and could be subject to modification.

Furthermore, other banks were set to be included in the underwriting syndicate, as detailed by sources who requested anonymity due to confidentiality reasons. At that time, both Klarna and Goldman Sachs declined to make any comments on the matter.

For more information about Klarna , please check out their detailed profile in our dedicated, industry-specific Company Database.


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Keywords: IPO, money laundering, regulation, risk management, KYC
Categories: Fraud & Financial Crime
Companies: Klarna
Countries: Sweden
This article is part of category

Fraud & Financial Crime

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Klarna

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