Swedish authorities, including the Police and the Financial Intelligence Unit (FIU), have accused crypto exchanges of being 'professional money launderers' (PML). This article explores what this means for crypto platforms and their users in Sweden.
Crypto Exchange Profiles
The FIU found that not all crypto exchanges are the same and categorized them into four profiles: * **Node Exchange Provider**: Operate like nodes in a network where several people take part in token swapping. * **Hawala Exchange Provider**: Transfer money through informal networks without physically passing on cash. * **Asset Exchange Provider**: List many digital assets and help finance large volumes of cryptocurrencies. * **Platform Exchange Provider**: Larger platforms where users can trade cryptocurrencies on a broad scale.
Government's Response
Swedish authorities are seriously addressing the issue. The report calls for increased law enforcement on crypto trading platforms. Many legitimate exchanges operate without breaking the law, but the report shows that a significant portion of them are involved in money laundering. Some of these exchanges can observe unusual activities, flag them, and block the culprits.
Focus on Mining and Tax Evasion
Swedish officials are also looking into cryptocurrency mining firms. The Tax Agency reviewed 21 firms, and eighteen of them provided false or incomplete tax information. This resulted in a $90 million tax demand. Many businesses avoid VAT by providing inaccurate crypto holdings reports or operations. However, two companies successfully appealed in court while others continue to face severe tax penalties.
In Sweden, crypto exchanges are under strict scrutiny. Authorities take a zero-tolerance approach to financial crimes in the crypto space, classifying these exchanges as professional money launderers.
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