New Money Laundering Act
The Ministry of Finance presented a proposal for a new Money Laundering Act on 16 February 2017 which, amongst other things, implements the EU's Fourth Anti-Money Laundering Directive. The proposal will lead to application of the Act to new groups of business undertakings, including gaming companies, and new sanction regulations will be introduced.
The proposal has been prepared by the Ministry of Finance and is based on reports issued by the Money Laundering Committee NOU 2015: 12 and NOU 2016: 27. The proposal implements the majority of the EU's Fourth Money Laundering Directive (EU-2015/849) (the "AMLD") with implementation deadline in June 2017. The AMLD has not yet been incorporated into the EEA Agreement and proposals for amendments in the AMLD have been made as recently as December last year. These amendments are taken into account in the Ministry of Finance' proposal.
The proposal also addresses shortcomings in Norwegian practices which were identified by the Financial Action Task Force (FATF) in 2014 and implements the European Parliament and Council Regulation (EU) 2015/847 on wire transfers.
The Money Laundering Committee's proposal for a separate register of beneficial owners is not included in the proposal and will be followed up at a later point in time.
The AMLD is a minimum harmonization directive and member states can adopt more stringent rules than required by the directive. The proposal includes stricter rules on some points.
Administrative sanctions, including administrative fines and temporary managerial bans, are proposed in line with the AMLD. However, the new administrative sanctions will not replace existing criminal sanctions, which will be kept parallel to the new sanctions.
2. Expanded scope of application
The proposal expands the scope compared to the current act, but does not go as far as suggested by the Money Laundering Committee.
It is proposed that gaming service providers are made subject to the Money Laundering Act in accordance with the AMLD. This means that all games that require permission under the Lottery Act, the Gaming Scheme Act and the Totalizator Act will be included while games such as cake lottery, small lotteries etc. will fall outside. In addition, it is proposed that the Gaming Scheme Act and the Totalizator Act should be amended to provide that management and beneficial owners of such undertakings should be subject to fit and proper requirements.
Insurance companies are not covered by the AMLD but falls within the scope of the current Norwegian Money Laundering Act. This will not change.
The proposal from the Money Laundering Committee to cover debt collection agencies and physical transportation of cash has not been followed up by the Ministry.
Furthermore, the Ministry, unlike the committee, does not propose for agents of foreign payment institutions to be obliged entities pursuant to the Money Laundering Act. Instead, further rules should be laid down in supplementary regulations, including rules on designation of a central contact point.
3. ADOPTION OF STRICTER RULES
3.1 Customer due diligence measures
In accordance with the AMLD, it is proposed amendments as to when customer due diligence measures are required.
The proposal sets out an obligation to perform customer due diligence measures for all occasional transactions (transactions where the obliged entity has no established customer relationship) which are wholly or partly electronic (wire transfers) and which exceed the amount of NOK 8,000. This also applies if the payer and the payee is the same person. For gaming companies, the limit for all occasional transactions will be NOK 16,000 and not NOK 100,000.
The requirements related to simplified customer due diligence measures are also proposed to be stricter. Under current rules, certain information requirements could be exempted from; this will no longer apply under the proposal and, hence, all relevant information must be collected.
The rules on politically exposed persons (PEP) are expanded, primarily to include people with high-ranking positions in Norway. Secondly, it is necessary to assess whether relevant persons other than the customer are PEP. These may be beneficial owners or persons with disposal rights over accounts. Furthermore, according to the proposal, being characterized as PEP is no longer limited in time and the one-year limit is proposed to be deleted.
Use of enhanced customer due diligence measures after a PEP has ceased to hold the relevant position must therefore be based on a risk evaluation.
The rules on enhanced customer due diligence measures and consequences of non-performance of due diligence measures will, for the most part, be kept unchanged.
3.2 Enquiries and reporting
In which situations the obligation to investigate is triggered is proposed to be slightly amended. The obligation to investigate is no longer triggered only by transactions but may also arise from general circumstances that indicate that funds are linked to money laundering or terrorist financing, independent of a specific transaction. The amendment entails that not only transactions may trigger the obligation to investigate but also other factors such as the general behavior of the customer.
At the same time, it is proposed to move those conditions that are currently set out in section 12 of the Money Laundering Regulations to the Money Laundering Act.
Furthermore, a separate reporting provision is proposed to clarify that reporting requirements also apply to the reporting officers, directors, employees and others who perform assignments on behalf of an entity. The same applies to the prohibition of disclosure.
3.3 Risk-based approach and risk assessment
More attention is paid to the risk-based approach, which is covered by a new chapter 3 in the Money Laundering Act. A separate provision is proposed for Risk Assessment of the obliged entity, which sets more specific requirements for the risk assessment of own business and sets a new requirement for this assessment to be documented and made available to the supervisory authorities if required. No exception is proposed to the new documentation requirement (as permitted by the Directive).
The statutory provision on internal routines is also moved to the new chapter 3 and it is explicitly stated that the routines should be updated.
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