Finansinspektionen, the Swedish Financial Supervisory Authority, has withdrawn the authorization of the neobank Intergiro Intl AB (Intergiro) to issue electronic funds after assessing that it had a high risk of being used for illicit purposes.
In an inspection of the company’s operations, the FSA uncovered alleged serious deficiencies on multiple levels and concluded that there was “a high risk that the company’s operations can be exploited for money laundering and terrorist financing.”
Among Intergiro’s alleged shortcomings were:
- failing to base the company’s risk assessments on real operational risks;
- failing to take proper customer due diligence measures in connection with high-risk customers; and
- not reporting all suspicious transactions to the police – while even those reports that were submitted were often sent with significant delays.
Neobanks
A neobank is a type of bank that’s operating exclusively online without a physical branch.
“Intergiro has had serious shortcomings in its work to combat money laundering and terrorist financing. This has meant an evident risk that criminals have been able to exploit Intergiro to launder criminal proceeds. This is very serious, and we are therefore revoking Intergiro’s authorization,” said Malin Alpen, Area Manager for Payments at Finansinspektionen.
Millions of money
The FSA started investigating the bank after the investitgative journalism TV program Uppdrag granskning revealed how fraudsters had used the bank to launder victims’ money.
Millions of funds are believed to have gone through the bank, with one example of an international fraud network transferring over SKr 20m ($2m) of stolen funds during four months in 2022 to three accounts of Lithuanian companies. These companies “only appeared to exist on paper” when the journalists tried to locate them.
Convicted economic criminals were also found in the bank’s management and among the shareholders, with convictions ranging from serious accounting to tax and even weapons infractions. There was even a connection between the neobank and the Trustor affair.
Trustor affair
The Trustor affair is one of the largest financial cases in Swedish history. It involved the takeover of a Swedish investment company listed on the Stockholm Stock Exchange in the summer of 1997. It was initially believed that SKr 600m ($62m) had disappeared from the company’s accounts after the takeover. But when all assets had been accounted for and the company had been liquidated, the shareholders had almost doubled the value of their shares as an indirect result of the takeover.
None of the owners had been vetted by the Swedish FSA, which was the direct result of the ownership structure of the bank, which was divided into ownership tranches below 10%. This fell below the threshold that would have triggered a review by the FSA.
Some of the employees bank’s employees raised concerns over money laundering and wanted to turn away some of the riskier customers establishing accounts with the bank. But the bank allegedly chose to onboard and retain the high risk customers, employees at Intergiro told Uppdrag granskning. “Things were approved which should not have have been approved,” one employee said.
Following the regulator’s decision, Intergiro must wind down its business before September 19, 2025. It has been prohibited from onboarding any additional customers, but can perform necessary activities to wind down its activities in a way that mitigates any detrimental impact on existing customers.
On its website, Intergiro says that it is appealing the FSA’s decision to revoke its E-Money Institution licence.
