New money laundering rules will enter into force on 15 October
With the implementation of the EU's fourth Money Laundering Directive, important changes and strengthenings are made to the Norwegian money laundering rules. In Cabinet meeting on 14 September, it was decided that the new rules will enter into force on 15 October 2018. At the same time, supplementary regulatory provisions were issued that will apply from the same date.
The new Money Laundering Act extends the scope of the money laundering rules (including to gaming companies) and strengthens the rules on customer measures, investigation duty and reporting. The rules on politically exposed persons (PEP) will now also include persons with high-ranking positions in Norway, which has triggered public debate regarding services to identify PEPs provided by various international operators. In addition, administrative sanctions are introduced for breach of the regulations, including that board members, general managers and employees of reporting entities may be imposed significant penalties for intentional and grossly negligent violations of the money laundering rules. The changes are further discussed in our newsletter of 19 February 2018.1
The Government's proposal for registration of beneficial owners, cf. our newsletter of 25 June 2018,2 has not yet been adopted and consequently does not enter into force at this stage.
The new Money Laundering Regulation, drawn up on the basis of the Financial Supervisory Authority of Norway's consultation memorandum of 25 June 2018,3 essentially continues the current regulations. However, it is especially worth noting that:
- The scope of the Money Laundering Act is extended to also apply to exchange and storage services for virtual currency (cryptocurrency). Such business will be subject to the law as a whole. Virtual currency exchange services are operators offering currency exchange and official payment methods, such as exchange machines. Virtual currency storage services – so-called CWPs – are companies that offer private cryptographic keys on behalf of customers in connection with receiving, storing and transferring virtual currencies. There are currently several providers of such services in the Norwegian market, including various Cryptocurrency Stock Exchanges. Contrary to the proposal in the consultation memorandum, an obligation for exchange and storage services for virtual currency to register with the Financial Supervisory Authority is introduced, and the services are subjected to supervision. With this, Norway is launching amendments adopted in the EU's Fourth Money Laundering Directive with implementation date 10 January 2020.4
- The Money Laundering Act is not applicable to companies that provide funding through donation (donation-based crowdfunding).
- The Regulations lay down rules for establishing a central contact point for foreign payment institutions operating in Norway through agents, and specifies the obligations that apply to the contact point. The obligation applies – in accordance with the Directive – where the company (i) has at least ten agents in Norway, (ii) has total payment transactions (or expected) of at least 3 million euros per financial year, or (iii) does not provide information to the Financial Supervisory Authority, making it possible to assess whether the criteria are met. The central contact point must be located in Norway and have good knowledge of Norwegian language and money laundering.
- Furthermore, the Regulations specify which parts of the Regulations will apply to agents of foreign payment institutions. These are the provisions on customer measures and ongoing follow-up, investigations and reporting, national contact points and information that will accompany payment transfers.
The entry into force means that companies covered by the Money Laundering Act must ensure that business and internal procedures and instructions are promptly updated – and no later than 15 October – in accordance with the new regulations.
3 Høringsnotat - Forslag til forskrifter til ny hvitvaskingslov (Regjeringen.no)
4 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing
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