Klarna has been fined about £36 million by Sweden’s financial regulator for violating regulations designed to combat money laundering.
FI, the Swedish watchdog, said that Klarna Bank’s general risk assessment did not contain any assessments of how its products and services might be used for money laundering or terrorist financing and that it did not properly implement due diligence measures in every case.
However, the watchdog said that the violations were not significant enough to issue either a formal warning or to withdraw authorisation for the company. Instead it issued Klarna with a fine of 500 million Swedish krone and “a remark” — a lesser form of rebuke.
Daniel Barr, director-general at FI, said: “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. There are therefore grounds on which to intervene against the bank.”
All of Sweden’s major banks have received fines for breaching anti-money laundering regulations. Swedbank, the country’s oldest lender, was ordered to pay SEK 4 billion (about £286 million).
The investigation into Klarna began in 2022 as a routine review.
In a statement, the bank emphasised that the fine was the product of rule interpretation and application rather than actual cases of money laundering.
Klarna added that the industry had to navigate a “complex set of regulations” and that it was the largest bank, apart from the Swedish state-owned bank SBAB, not to be investigated until now.
Lenders in the “buy now, pay later” sector have come under increasing scrutiny about how they manage credit risk and debt collection.
Earlier this year Nikhil Rathi, chief executive of the Financial Conduct Authority, said that the industry needed oversight from regulators to stop consumers taking on too much debt.
Regulations proposed by the Treasury in October 2021, which stalled in the last parliament, would have required lenders to carry out affordability checks comparable with other types of lending, such as credit cards and personal loans.
Shops would have given customers credit card-style protections on their purchases and people would have been able to make complaints to the Financial Ombudsman Service.
Klarna is considering a public listing in the US in the first quarter of next year, where it expects it could fetch a valuation of up to $20 billion.
Founded in 2005, the company has slipped from a valuation of $46 billion in 2021 — it was Europe’s most valuable private start-up at the time — to $6.7 billion in its last funding round in 2022.
The lender was profitable from its founding until 2019, when it started making losses owing to its expansion in the US. It made a net profit of about £15.4 million in the third quarter but over the first nine months of the year, it made a net loss of about £8.3 million.