Financial Crime World

Norway Cracks Down on Money Laundering: Compliance Obligations for Financial Institutions

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Norway has implemented strict anti-money laundering (AML) laws to combat money laundering and terrorist financing. These laws require financial institutions to adhere to stringent compliance obligations, which are outlined in the AML Act.

Who is Affected by the AML Act?

The AML Act applies to:

  • Banks
  • Credit institutions
  • Financing institutions
  • The central bank of Norway
  • E-money institutions
  • Undertakings engaged in foreign exchange activities
  • Payment service undertakings
  • Investment firms
  • Management companies for securities funds
  • Insurance undertakings
  • Undertakings engaged in deposit activities
  • Managers of alternative investment funds

Compliance Obligations for Financial Institutions

Financial institutions must:

Identify and Assess Risk

  • Identify and assess the risk of money laundering and terrorist financing, taking into account factors such as:
    • Business type and products
    • Customer relationships
    • Type of customers
    • Geographical factors
    • And more

Develop Procedures for Compliance

  • Develop updated procedures to ensure compliance with AML obligations
  • Implement Customer Due Diligence (CDD) measures

CDD Measures

CDD measures include:

  • Ongoing monitoring based on an assessment of the risk of money laundering and terrorist financing
  • Considering the purpose of the customer relationship, amount of funds involved, size of transactions, regularity and duration of the customer relationship
  • Monitoring customer relationships on an ongoing basis, taking into account transactions carried out in accordance with information obtained on the customer

Record Keeping and Retention

Financial institutions must:

  • Record and retain information and documents for a period of five years after the customer relationship has ended or the transaction has been completed

Internal Controls

Financial institutions must have internal controls in place based on their risk assessment, including:

  • Appointing a Compliance Officer
  • Conducting employee screening
  • Establishing independent control of compliance with internal procedures
  • Providing training for employees to familiarize them with AML obligations

Consequences of Non-Compliance

The Norwegian government is serious about combating money laundering and terrorist financing. Financial institutions that fail to comply with these regulations may face severe penalties.

Conclusion

It is essential for financial institutions operating in Norway to understand their AML obligations and take steps to ensure compliance. By following the guidelines outlined above, financial institutions can reduce their risk of non-compliance and help combat money laundering and terrorist financing.