Swedish Financial Supervisory Authority launches in-depth analysis of banks' correspondent relationships and AML risks

The Swedish Financial Supervisory Authority announced an in-depth analysis of correspondent relationships in the banking sector. The work is intended to deepen the authority's understanding of how banks in Sweden use these arrangements, in which one bank provides payment services or payment-related banking services to another bank, often across borders, and how they manage the associated risks of money laundering and terrorist financing. The analysis will focus on how banks handle customer due diligence, transaction monitoring, information requests and reporting of suspicious transactions within correspondent relationships. The authority noted that these arrangements are important for international payments and the global payment system, but that payments routed through multiple institutions and across borders can create elevated AML and terrorist financing risks and reduce banks' visibility over transaction flows and the underlying customers.