Money laundering and financing of terrorism

Developments  

In 2022, Russia's war against Ukraine changed the criminal landscape.The threat assessment from Økokrim (the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime) emphasises the increased risk of sanctions evasions, human trafficking and the exploitation of vulnerable people through, for example, work-related crime. The EU’s supranational risk assessment establishes that the Covid-19 pandemic, which had an impact on the criminal landscape in 2020 and 2021, remained relevant in 2022. In its threat assessment, Økokrim also highlights the links between various professional actors and key persons in criminal circles. Økokrim has further observed that various professional enablers, including lawyers, accountants, auditors, real estate agents and people in banking and finance, facilitate various forms of financial crime and money laundering. 

Supervisory experience shows that several obliged entities have stepped up their efforts against money laundering and terrorist financing. At the same time, Finanstilsynet has revealed that compliance with the AML legislation in many cases remains inadequate. Improvement areas pointed out by Finanstilsynet at several inspections include poor understanding of risk, insufficient capacity to follow up risks and inadequate AML procedures. 

International cooperation  

Finanstilsynet participates in the work of the European Banking Authority (EBA), together with financial supervisory authorities in other EEA states. In 2022, there was a high level of activity in the EBA, which published guidelines and draft guidelines on a variety of AML-related topics. Finanstilsynet meets regularly in the EBA's AML/CFT Standing Committee and in several sub-groups.  

In 2021, the EBA carried out an evaluation of Finanstilsynet’s approach to AML/CFT supervision of banks. In its evaluation, the EBA pointed to Finanstilsynet’s current resource situation in its efforts against money laundering and terrorist financing. The EBA's recommendations will be assessed and further followed up in 2023.  

Internationally, Finanstilsynet also participates in the Nordic-Baltic Working Group on AML and in the Financial Action Task Force (FATF). 

In 2021-2022, Finanstilsynet also took part in a project under the auspices of the International Monetary Fund (IMF) which assessed the approach to AML/CFT inspections in the Nordic and Baltic regions. A report is expected to be completed during 2023. 

The scope of international AML cooperation is increasing. With respect to institutions with activities in several countries, Finanstilsynet cooperates with relevant financial supervisory authorities through so-called supervisory colleges in order to monitor individual institutions’ compliance with the AML legislation. 

Supervision, monitoring and control 

Supervision of compliance with the AML legislation  

During 2022, Finanstilsynet's supervision of institutions' compliance with the AML legislation took place through both general inspections and separate AML/CFT inspections. The 2022 inspections revealed, among other things, deficiencies in institutions' risk assessments, operational procedures and training.  

As part of its supervisory work in 2022, Finanstilsynet also followed up the institutions' risk-based compliance with the AML Act. This included the institutions’ customer knowledge and business-specific risk assessments, their compliance with requirements for ongoing monitoring and the banks' screening of customers and transactions linked to sanctioned persons. Administrative fines were given to three banks, two audit firms, five external accounting firms and two real estate agencies. Finanstilsynet also followed up DNB Bank ASA's lack of documentation of customer IDs and levied a coercive fine of NOK 50 000 per business day until the deficiencies have been rectified.  

More information on this can be found in the reports from each supervised sector.  

Supervision of virtual asset service providers   

Providers of exchange and custodial services for virtual assets are subject to the Norwegian AML legislation, and Finanstilsynet oversees the institutions’ compliance with the regulatory framework. Finanstilsynet has no other supervisory tasks vis-à-vis providers of exchange and custodial services for virtual assets.   

One new entity was registered in 2022.  

During the year, Finanstilsynet cooperated with, among others, Økokrim to follow up registered entities, as well as new providers applying for registration. Finanstilsynet also provided guidance to a number of national and international market players in matters related to the Norwegian regulatory framework, registration requirements and application processes. 

Finanstilsynet carried out one on-site inspection of a registered virtual asset service provider in 2022. Conclusions from the inspection will be presented in 2023. During the year, Finanstilsynet also followed up orders issued to providers after inspections carried out in 2021.  

In cooperation with the police and Økokrim, Finanstilsynet followed up a number of unregistered market players during the year, thus seeking to prevent illegal activities, including foreign firms targeting the Norwegian market.  

In light of the upcoming European Markets in Crypto-Assets (MiCA ) regulation, Finanstilsynet initiated a process in 2022 to identify the potential consequences future regulations may have on supervisory activities.  

Trust or company service providers 

Two new trust or company service providers were registered in 2022. At the end of the year, a total of five entities had such authorisation. Apart from the checks carried out at the time of registration, Finanstilsynet did not supervise these providers during 2022. 

Regulatory development  

Initiatives to strengthen European regulations  

In 2021, the European Commission presented a package consisting of four legislative proposals to strengthen the EU’s anti-money laundering and counter-terrorist financing (AML/CFT) rules and initiatives. In 2022, the proposals were under political consideration in the EU. At the heart of the proposals is the creation of a new EU authority for combating money laundering and terrorist financing. The new authority shall contribute to more harmonised AML/CFT supervision in the EEA member states and strengthen the cooperation between their financial intelligence units (FIUs). Another key element in the proposal is that the obligations are to be stipulated in regulations, which will ensure that identical legislation is enforced in all EEA states.  

Throughout 2022, the EBA worked to prepare the upcoming regulations and provided input to a number of matters related to the European Commission's proposals. Finanstilsynet contributed to this work. 

Extension of intermediate limitation period for levying administrative fines  

In 2021, the Ministry of Finance issued a public consultation, based on a proposal from Finanstilsynet, to extend the limitation period for levying administrative fines laid down in the AML Act from two to five years. The rules were adopted and came into force in 2022. 

New guide to the AML Act  

In November 2022, Finanstilsynet published a new guide to the AML Act and Regulations. The guide provided more detailed guidance in a number of areas, including risk assessments, the establishment, rejection and termination of customer relationships, and the investigation of suspicious circumstances.   

The war in Ukraine – sanction packages and guidance to the asset freeze provisions  

The guidance to the asset freeze provisions prepared by the Ministry of Foreign Affairs and Finanstilsynet aims to make it easier to understand the obligations and prohibitions ensuing from the financial restrictions set out in the Norwegian regulations based on sanctions from the UN Security Council and restrictive measures from the EU. In 2022, Finanstilsynet and the Ministry of Foreign Affairs worked on a new version of the guidance, expected to be completed in early 2023. During the year, Finanstilsynet also assisted the Ministry of Foreign Affairs in preparing new sanction packages in connection with the war in Ukraine.  

Guidance  

In 2022, Finanstilsynet provided guidance by publishing information on finanstilsynet.no, including:   

• inspection reports  
• circulars providing guidance on Finanstilsynet’s supervisory practices 
• descriptions of new legislation on separate topic pages 
• consultations on draft legislation, both from Norway and EU consultations of relevance to the EEA 

Finanstilsynet also gave speeches at the AML Conference and other seminars, some of which were arranged by trade associations.