Financial Crime World

Widespread Non-Compliance with Anti-Money Laundering Regulations Among Alternative Investment Funds

A recent survey conducted by Finanstilsynet, Norway’s financial regulator, has revealed significant deficiencies in compliance with anti-money laundering (AML) regulations among alternative investment funds (AIFs). The findings have sparked concerns over the risks of money laundering and terrorist financing.

Survey Results

The survey, which was initiated in 2020, involved 215 entities in Norway’s AIF sector. The results revealed that registered AIF managers were disproportionately represented among those with fundamental AML deficiencies. The findings will inform further investigations into firms’ compliance with AML regulations, including on-site inspections and additional information gathering.

Key Findings

  • Inadequate compliance with AML regulations was identified in 71% of the surveyed entities.
  • Only 29% of the entities had conducted entity-specific risk assessments.
  • Poor customer due diligence measures were found to be prevalent among 64% of the entities.
  • Insufficient ongoing monitoring was identified in 55% of the entities.

Regulator’s Response

Finanstilsynet has taken steps to address the identified shortcomings. The regulator imposed administrative fines on several firms, ranging from NOK 75,000 to NOK 600,000. In addition, Finanstilsynet plans to publish a summary report on its survey findings.

Regulatory Action

  • Administrative fines were imposed on several firms for non-compliance with AML regulations.
  • On-site inspections and additional information gathering will be conducted to further investigate firms’ compliance with AML regulations.
  • A summary report on the survey findings will be published by Finanstilsynet.

Importance of Cooperation

Finanstilsynet emphasizes the importance of cooperation with other authorities in combating money laundering and terrorist financing. The regulator participates in Norway’s Contact Forum for combating money laundering and terrorist financing and will continue to work closely with other agencies to implement and develop strategies against these crimes.

Conclusion

The survey results underscore the need for AIF managers, especially those without licenses, to prioritize compliance with AML regulations to protect the integrity of their businesses and prevent potential risks.