SWEDEN Trends and Developments Contributed by: Niclas Rockborn, Arijan Kan and Rikard Sundstedt, Gernandt & Danielsson
Restrictions of Practical Importance Common structure of European Union sanctions regimes As Sweden principally applies sanctions adopted through European Union regulations, the substantive restrictions are set out in the regulation governing the relevant sanctions regime. Their precise scope var - ies, but the recurring measures include asset freezes, prohibitions on making assets available, restrictions on trade and services, and prohibitions on circum - vention; see The Legal Framework: Broader Criminal Enforcement above for more detail. Asset freeze – screening and indirect exposure International sanctions commonly require all funds and economic resources owned, held or controlled by a listed person or entity to be frozen. They also pro - hibit funds or economic resources from being made available, directly or indirectly, to or for the benefit of a listed person. These obligations apply to all Swed - ish operators, not only regulated financial institutions. International sanctions may therefore prohibit more than direct payments to listed persons. Transactions involving employees, creditors, service providers, rel - atives or intermediaries may also be prohibited where they release value to, discharge an obligation of or otherwise benefit a listed person. Consequently, international sanctions screening can - not be limited to the immediate counterparty. Busi - nesses must also consider whether an unlisted coun - terparty is owned or controlled by a listed person. Ownership will generally exist where a listed person holds at least 50% of the proprietary rights or a major - ity interest. Holdings of several listed persons may need to be aggregated. Control is a separate, substance-over-form assess - ment. Relevant considerations include the ability to appoint or remove a majority of the governing body, control voting rights, exercise dominant influence or otherwise direct the entity’s affairs. Where ownership or control exists, making assets available to the enti - ty will generally be treated as indirectly making them available to the listed person.
Systematic sanctions screening has traditionally been less common among Swedish businesses operating primarily in the domestic market, particularly outside the regulated financial sector. This is changing, and more Swedish businesses are introducing counter - party screening. The appropriate level of screening and due diligence depends on the company’s risk profile, including its ownership structures, payment flows and exposure to foreign jurisdictions; see Gov- ernance and Compliance Gain Importance below for more detail. Sectoral and trade restrictions – a reality for Swedish businesses International sanctions may also restrict, inter alia, imports, exports, financing, investment and the provi - sion of professional services to specified counterpar - ties, sectors or whole jurisdictions. These measures remain highly relevant to Sweden’s export-oriented industrial and technology sectors. For many Swedish businesses, the sanctions against Russia represented their first significant exposure to broad sectoral restrictions affecting a geographically proximate market. Although sectoral measures were introduced in 2014, their expansion following Russia’s full-scale invasion of Ukraine in 2022 brought sanc - tions compliance into the day-to-day operations of a much wider range of Swedish industrial, technology, financial and professional services businesses. Circumvention – a potential enforcement priority Participation in arrangements intended to circumvent international sanctions is prohibited under interna - tional sanctions regimes. Circumvention may include: • routing goods, payments or services through inter - mediaries or third countries; • concealing the identity or ownership of the ultimate counterparty; • providing false end user or destination information; or • restructuring a transaction so that a listed person retains control or receives the economic benefit. Swedish authorities have specifically highlighted the diversion of Swedish-origin industrial products and technology through third countries to actors connect -
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