4a collaboration for credit institutions: an introduction

Collaboration between various entities is crucial in the fight against financial crime. The so-called 4a collaboration, named after Chapter 4a of the Swedish Act (2017:630) on measures against money laundering and financing of terrorism (the AML Act), represents a significant step forward in this effort.

In a recent seminar organised by Trapets, Daniel Särnqvist, Business Developer at the Swedish Tax Agency (Skatteverket), and national coordinator against money laundering, addressed the structure, opportunities and challenges of the 4a collaboration for credit institutions.

In this article, we'll highlight some of the key insights shared in the session about the 4a collaboration within the context of Swedish anti-money laundering (AML) legislation.

What is 4a collaboration?

4a collaboration, also known as cooperation against money laundering and financing of terrorism, was introduced as of 1 January 2023 through a new Chapter 4a in the AML Act. Its purpose is to enable early cooperation between different authorities and institutions to prevent, avoid and/or detect money laundering or terrorism financing that is serious in nature, complexity or scale.

Money laundering is a complex crime that often involves multiple layers of transactions and various entities. 

Traditional methods of detection, investigation and enforcement are often insufficient to tackle such sophisticated schemes. The 4a collaboration model addresses this challenge by providing for collaboration in the form of intelligence sharing between:

• Law enforcement agencies
• The Financial Supervisory Authority (Finansinspektionen, FI)
• Other supervisory authorities under the AML Act
• Credit institutions

This multi-faceted approach ensures that all relevant parties are involved in preventing and detecting money laundering activities.

There are two types of cooperation included in the 4a collaboration:

1. Cooperation involving law enforcement agencies, the Financial Supervisory Authority (FI), and credit institutions. This type of cooperation is aimed at customers who use credit institutions.
2. Cooperation between law enforcement agencies and supervisory authorities. This type of collaboration is intended to allow authorities to inform supervisory bodies about operators who don't comply with money laundering regulations.

How to implement the 4a collaboration as a credit institution

Implementation and execution of 4a collaboration involves several stages:

Step 1: Decision

• Decision by a participating authority to initiate collaboration.
• Identify the object of collaboration, the invited participants and the time frame.
• Participation by other authorities and credit institutions on a voluntary basis.

Step 2: Introduction phase

• Verify whether an institution is within the scope of 4a collaboration.
• Identify contact persons, define the identified problems, establish collaboration points, and familiarise all involved stakeholders.

Step 3: Execution

• Clarify the objectives and forms for the collaboration.
• Clarify any differences in interpretation of the relevant legislation, identify all the participating parties, and determine the period of the collaboration.
• Discuss confidentiality concerns between all stakeholders.

Step 4: Conclusion

• Evaluate the collaboration upon the contract's expiry.
• Determine if the objectives were achieved.
• Decide whether to terminate or continue the collaboration.

Challenges with 4a collaboration and future directions for credit institutions

While the 4a collaboration model offers a promising approach to combating money laundering, it has challenges. These include:

• Resource allocation: Effective collaboration requires significant resources, including personnel, technology, and funding. Ensuring all participating entities have the necessary resources is crucial for success.
• Coordination and communication: Maintaining clear and consistent communication between different entities can be challenging, especially when dealing with complex setups.
• Legal and regulatory hurdles: Legal and regulatory complexity, as well as differences in interpretation and application of legal and regulatory frameworks between entities, can pose challenges for credit institutions and slow down effective collaboration.

Despite these challenges, the 4a collaboration model represents a step forward in the fight against money laundering and terrorism financing. By fostering cooperation between various entities, it enhances authorities' ability to prevent and detect financial crimes more effectively.

Conclusion

The 4a collaboration is a testament to the power of cooperation in fighting financial crime. 

Bringing together different authorities and institutions can create a comprehensive and effective approach to tackling money laundering.

About Daniel Särnqvist

Daniel is a frequent lecturer, panellist, and adviser on money laundering issues at IFU at The Stockholm School of Economics. In 2023, Daniel was awarded the Anti Money Laundry Award (AML Award) for his efforts in the work against money laundering.