They haven't stopped. All the "white block" engines (like in your S40) use timing belts. They run around the water pump, a tensioner, an idler pulley and around the intake and exhaust cams. It's behind a cover on the left side of the engine (if you're looking at it with the hood open).
The link below shows the two gears on the left side of the engine with the timing belt removed. Hopefully that makes it easier to see where it goes.
http://www.altautorepair.com/wp-content/uploads/2012/10/IMG_1488.jpg
Volvo stopped using Gear to Gear Timing when they switched to the B23 Engine and have used Belt Timing ever since.
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