In a sweeping crackdown on illegal cryptocurrency activities, the Swedish Police Authority and Financial Intelligence Unit (FIU) have classified certain cryptocurrency exchanges as “professional money launderers” (PMLs). This action is part of an aggressive effort to combat unlicensed and illegal operators suspected of facilitating money laundering for individuals and organized crime networks.
The FIU has conducted an in-depth analysis of these exchanges and categorized them into four profiles based on their operational characteristics: node exchange providers, hawala exchange providers, asset exchange providers, and platform exchange providers. These classifications help authorities target specific activities associated with these operators.
FIU Pushes for Crypto Regulation
The Swedish FIU has called for stronger regulatory oversight and more robust law enforcement measures within the cryptocurrency sector. The agency stated that illegal crypto operators represent an “emerging threat” and a significant component in organized crime's efforts to maintain and expand their criminal enterprises.
At the same time, the FIU recognizes the role of licensed and legitimate crypto exchanges in reducing money laundering risks. These compliant platforms are encouraged to stay vigilant, monitor for suspicious trading patterns, and take action when illegal activity is suspected, such as halting transactions or offboarding users involved in criminal activity.
Tax Evasion in Bitcoin Mining Community
In addition to targeting illegal cryptocurrency exchanges, Swedish authorities have set their sights on tax evasion within the Bitcoin mining industry. A recent investigation by the Swedish Tax Agency found that 18 out of 21 crypto mining firms submitted misleading or incomplete tax information between 2020 and 2023. This resulted in an estimated $90 million in unpaid taxes.
The Swedish Tax Agency expressed further concerns about the possibility of money laundering occurring through these data centers, which currently operate outside the scope of the Money Laundering Act, leaving them exempt from regulatory oversight.
Legal Actions from Bitcoin Mining Firms
Following the tax agency’s findings, several crypto mining companies filed legal appeals, contesting the fines and liabilities. Two firms succeeded in reducing their liabilities after a court ruling, adjusting the amounts they owed in light of the verdict.
Western Europe’s Role in Crypto Adoption
Sweden’s crackdown on illegal crypto exchanges and Bitcoin mining tax evasion comes amid a broader surge in cryptocurrency adoption across Western Europe. This region now leads the world in crypto usage, with daily trading numbers ranging from 1.2 million to 1.5 million individuals. Countries like Germany, France, and Austria are at the forefront, with Austria seeing a remarkable 70% growth in crypto users in the past year.
Notably, younger generations such as Gen Z and Millennials are driving cryptocurrency adoption in Europe. A study commissioned by crypto exchange Bitpanda found that 23% of Switzerland’s population now owns digital currencies, the highest percentage in Europe, followed by Austria at 18% and France at 14%.