Title: Norwegian Financial Regulator Cracks Down on Money Laundering and Terrorist Financing: Insights from Finanstilsynet
heightened global risks and increasing threats
Amidst elevated global risks of money laundering and terrorist financing, the Norwegian financial regulator, Finanstilsynet, issues a stark warning about the growing danger of sanctions evasions, human trafficking, and exploitation of vulnerable people through work-related crimes. This comes in the wake of Russia’s ongoing conflict with Ukraine, which has significantly altered the criminal landscape.
the role of professional enablers ⭐
Økokrim, Norway’s National Authority for Investigation and Prosecution of Economic and Environmental Crime, underlines the increasing threat of professional enablers, such as lawyers, accountants, auditors, real estate agents, and individuals in banking and finance, who facilitate various forms of financial crime and money laundering.
weak compliance with anti-money laundering (AML) legislation ⚠️
Despite increased efforts by several obliged entities to combat money laundering and terrorist financing, Finanstilsynet revealed last year that compliance with the Norwegian AML legislation remained inadequate in many cases. The following issues emerged as the key areas of concern:
- Inadequate understanding of risk
- Insufficient capacity to follow up risks
- Ineffective AML procedures
international efforts to combat financial crimes and terrorism financing 🌍
As an active participant in various initiatives aimed at combating financial crimes and terrorism financing, Norway’s Finanstilsynet collaborates with the following organizations:
- European Banking Authority (EBA)
- Nordic-Baltic Working Group on AML
- International Monetary Fund’s (IMF) Project on Assessing the Approach to AML/CFT inspections in the Nordic and Baltic regions
evaluations and recommendations 📊
In 2021, the EBA conducted an evaluation of Finanstilsynet’s approach to AML/CFT supervision of banks, which identified resource constraints in Finanstilsynet’s efforts against money laundering and terrorist financing. The recommendations from the evaluation will be assessed and followed up in 2023.
virtual assets and regulatory framework 💻
As of 2022, providers of exchange and custodial services for virtual assets are subject to the Norwegian AML legislation, and Finanstilsynet oversees their compliance with the regulatory framework.
fines and supervision 💰
Supervision of compliance with the AML legislation took place through the following means, leading to fines for:
- Three banks
- Two audit firms
- Five external accounting firms
- Two real estate agencies
Lack of documentation of customer IDs at DNB Bank ASA resulted in a coercive fine of NOK 50,000 per business day.
cooperation with international counterparts 🌐
Finanstilsynet collaborates with Økokrim, the police, and international counterparts to follow up unregistered market players and potential violations of foreign firms targeting the Norwegian market.
preparation for European Markets in Crypto-Assets (MiCA) regulation 🇪🇺
As the EU prepares for the European Markets in Crypto-Assets (MiCA) regulation, Finanstilsynet is taking steps to identify potential impacts on supervisory activities.
trust or company service providers 🔒
Regarding trust or company service providers, Finanstilsynet registered two new entities in 2022, totaling five entities, and conducted no supervisory activities in 2022 apart from checks performed at the time of registration.
European Commission’s new EU authority and legislation enforcement 🇪🇺
The European Commission presented a package last year to strengthen the EU’s AML/CFT rules, including the creation of a new EU authority for combating money laundering and terrorist financing and identical legislation enforcement in all EEA states. Finanstilsynet contributed to the preparation of the upcoming regulations.
legislative updates and cooperation with the Ministry of Finance 📜
In response to the conflict in Ukraine, Finanstilsynet and the Ministry of Foreign Affairs worked together to provide guidance on the obligations and prohibitions arising from financial restrictions based on UN Security Council sanctions and EU restrictive measures. The updated version of the guidance is expected to be completed in early 2023. Norway’s Ministry of Finance extended the limitation period for levying administrative fines related to the AML Act from two to five years, and Finanstilsynet published a new and more detailed guide to the AML Act and Regulations. Additionally, Finanstilsynet provides guidance to market players and the public through various means, including inspection reports, circulars, descriptions of new legislation, consultations on draft legislation, and speaking at seminars and conferences.