Sweden’s Financial Supervisory Authority Finansinspektionen (FI) has issued Klarna a fine of $50 million over faults in its anti-money laundering protections.

FI said it investigated the financial services firm’s compliance with anti-money laundering regulations during the period between April 2021 and March 2022, including its general risk assessment compliance and customer due diligence procedures.

The regulator said its investigation revealed that Klarna violated a number of key regulations and that its risk assessment compliance showed “significant deficiencies”.

It went on to say that the FinTech failed to provide assessments of how its products and services could be used for money laundering or terrorist financing.

According to the authority, the bank does not have procedures and guidelines indicating when due diligence is required for customers using Klarna's billing products.

Daniel Barr, director general at FI, emphasised the need for banks to follow anti-money laundering regulations to counteract the risk that the firm's operations could be used by criminals.

“Our investigation shows that Klarna has not followed the requirements on, among other things, a general risk assessment and procedures and guidelines for due diligence measures,” he said. “There are therefore grounds on which to intervene against the bank.”

A Klarna's spokesperson said: "The decision from the SFSA follows a routine review, initiated in 2022, of Klarna's compliance with anti-money laundering regulations—not actual cases of money laundering. We have maintained constructive dialogue throughout this process which is part of our commitment to a robust and secure financial environment."

Several banks have recently been hit with penalties for money laundering violations, including Toronto-Dominion Bank, commonly referred to as TD Bank, which was fined over $3 billion in October after it was accused of failing to monitor transactions and allowing money laundering activities.

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