Klarna under fire by Swedish watchdog for bank secrecy breach

Sweden’s financial watchdog Finansinspektionen is investigating payments firm Klarna over a potential breach of banking secrecy laws in connection with an IT incident at the firm in May.

For a 30 minute period on May 27, Klarna customers were shown other users’ data – a digital mishap which the firm called a mistake, saying this was the result of “human error.”

The watchdog said, “(We) will investigate whether Klarna has violated bank secrecy in connection with an IT incident in May where the bank’s customers were able to access information about each other for a limited time.

“Bank customers must know that their information is secure and banks have a major task in always protecting the privacy of their customers.”

A spokesperson for Klarna said that the probe, “was very much expected as part of our regular dialogue with the Swedish FSA and as always we approach this with full cooperation and transparency.” Customers card details were not part of the information accidentally shown to other users, Klarna said.

According to the regulator, the issue about Klarna’s security would contribute to a larger survey announced back in March. That survey would allow for a look into generally how Klarna works with information and cybersecurity risks.

Last week, Finansinpektionen general director Erik Thedéen said Klarna will face the watchdog’s second-highest level of scrutiny at the risk of it becoming the next Wirecard. Thedéen made the comment in an interview with Dagens Industri in the context of German payment processing giant Wirecard collapsing following a multi-billion-dollar scandal.

“Klarna is now a Category 2 company, so we will conduct stress tests more often and this particular question will obviously be one that will be considered ahead of any decision we have ahead of us – if this level of risk is compatible with the demands put on this bank,” Thedéen said,  quoted in the Dagens Industri article.

Klarna recently bagged a venture funding round of about $639m, which took its valuation to a total of $45.6bn and saw the company planning to expand globally.

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