The media reports that in Sweden, the Financial Supervisory Authority (FSA) has conducted an estimate of the risk assessment system currently used by Klarna and after that made critical remarks.
The mentioned regulator claims that the specified fintech company, as part of its approach to ensuring the security of financial operations and preventing the transfer of money for illegal purposes, has undertaken such an amount of effort that is not sufficient to effectively counter such a process as money laundering. The FSA also noted that Klarna does little to curb transactions aimed at financing terrorist activities.
In a letter to the chief executive officer of the fintech company Sebastian Siemiatkowski, the regulator said that as part of the preliminary monitoring of the functional system of the firm, designed to identify and prevent illegal money transactions, a violation of the rules regarding the general risk assessment and threat assessment of users was recorded. The FSA also noted in the relevant context that Klarna has shortcomings in complying with the rules of the Know Your Customer category. Moreover, the regulator has filed claims against the company’s practice regarding the application of measures against users whose actions contain a high level of money laundering risk.
Information about claims against Klarna by the FSA in the context of this firm’s approach to countering illegal transactions and financial operations related to relevant risks was made public to the media last Monday, September 9.
According to journalists, in the foreseeable future, the regulator will decide whether it should take any action against the fintech company. Also, in this case, the FSA will have to form a concept for the practice of interaction with Klarna.
In response to a media request regarding claims against the fintech company, the regulator said that it would inform about the decision within the framework of the relevant issue.
Klarna has not yet provided journalists with any comments on the negative assessment from the FSA. This fintech company provides its clients with financial services related to the Buy Now, Pay Later (BNPL) category. It is also worth noting that Klarna is currently preparing for an initial public offering (IPO) of shares. As part of the related efforts, the fintech company is targeting a market capitalization figure of about $20 billion.
Last month, Klarna released information about its earnings in the first half of the current year. The revenue of the fintech company increased by 27% during this period.
Sebastian Siemiatkowski says that the massive global network of the firm continues to expand rapidly. In the relevant context, it was noted that millions of new consumers and 68,000 new merchant partners are joining this network.
It is worth mentioning that in March Klarna was fined 7.5 million Swedish crowns (about $723,000). The Swedish court made the relevant decision because this fintech company violated the European Union’s General Data Protection Regulation (GDPR).
The mentioned country’s Administrative Court of Appeal ruled that Klarna did not fully provide its clients with information about the practice of storing their personal data. Also in this context, it was separately noted that the relevant information was unclear or difficult to access.
In March 2022, the Swedish Authority for Privacy Protection stated that, in its opinion, the fintech company did not comply with GDPR rules. In this case, the norms that relate to informing users about the approach to handling their personal data were implied. At that time, Klarna stated that the audit revealed flaws in the privacy notice, which was used for three months, between March and June 2020. It should be clarified that in this case, confidentiality messages are meant, and not an explanation of the practice of collecting or handling data by a fintech company.
As for the IPO, Klarna intends to implement the corresponding intention next year. The media reported that the fintech company tapped Goldman Sachs to help with its listing.
As we have reported earlier, Klarna’s Internal AI Assistant Answers 2,000 Employee Questions Daily.
