https://www.pymnts.com/buy-now-pay-later/2024/swedish-regulator-criticizes-klarna-anti-money-laundering-measures/

Sweden’s Financial Supervisory Authority (FSA) reportedly criticized Klarna’s risk assessment, saying the company has not done enough to battle money laundering and terrorist financing.

The FSA said in a letter to Klarna CEO Sebastian Siemiatkowski that its preliminary assessment found that the company violated regulations having to do with general risk assessment, risk assessment of customers, know your customer rules, and measures regarding customers associated with a high risk of money laundering, Bloomberg reported Monday (Sept. 9), citing an article by Swedish business newspaper Dagens Industri.

The Dagens Industri report is based on a highly redacted copy of the letter, according to the Bloomberg report.

The regulator will now examine whether it should take action, and what it should do, per the report.

Asked about the article by Bloomberg, the FSA said, per the report: “We will communicate our decision when we have made one.”

Klarna did not immediately reply to PYMNTS’ request for comment.

The report comes as the Swedish buy now, pay later (BNPL) company is reportedly preparing to launch its initial public offering (IPO), seeking a valuation of around $20 billion.

When reporting half-year earnings Aug. 27, Klarna said its revenues increased 27% in the first half of the year. Its adjusted profits increased to $66 million, compared to an adjusted loss of $45 million in the same period in 2023.

“Klarna’s massive global network continues to expand rapidly, with millions of new consumers joining and 68,000 new merchant partners,” Siemiatkowski said at the time in a press release.

In March, Klarna was fined 7.5 million Swedish crowns (about $723,000) after a Swedish court ruled that the company violated the European Union’s General Data Protection Regulation (GDPR).

Sweden’s Administrative Court of Appeal ruled that Klarna gave its clients insufficient information about how it would store their personal data, and the information it did provide was unclear or difficult to access.

The Swedish Authority for Privacy Protection said in March 2022 that it found Klarna had not complied with GDPR rules having to do with how it informs users about its handling of their personal data.

Klarna said at the time that the audit investigated flaws in a privacy notice that was used for three months, from March to June 2020, and that it concerned information provided in the privacy notice — not Klarna’s collection or handling of data.