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Money laundering regulations become tougher

10.01.2001

The Money Laundering Prevention Act was initially adopted in November 1998. The act provided a legal definition of 'money laundering' and regulated the obligations of credit and financial institutions, and the role of the Financial Intelligence Unit.

In practice, certain shortcomings of the act soon became apparent and these were addressed by amending the act in October 2000. The amendments took effect in November 2000. Entities with obligations in relation to preventing money laundering have been more precisely defined to include, for example, organizations related to real estate and gambling.

Credit and financial institutions must identify all persons (or representatives of persons) who undertake cash transactions of more than Ekr100,000 or non-cash transactions involving more than Ekr200,000. Representatives are obliged to name those with whom they are making large transactions. The information is to be kept for at least five years following the end of the contractual relationship with the client.

The Financial Intelligence Unit is part of the Ministry of Internal Affairs. The unit is required to forward significant information on money laundering to pre-trial investigation authorities, the prosecutor and the courts in connection with court proceedings.

The act provides guidelines regarding the procedure for informing the unit of money laundering. In the event of a justified suspicion of money laundering, the unit may suspend a transaction or impose restrictions on the use of money in an account for up to two working days following an initial attempt to carry out a transaction. After this time, the transaction may only be undertaken with the unit's written permission.

Credit and financial institutions, and their employees, are not liable to clients for damages resulting from failure to undertake a transaction within a given term when the delay is due to investigations by the unit.

A manager or other employee of a credit or financial institution who submits information to the unit cannot, on the basis of the information submitted, be accused of a breach of confidentiality imposed by law or contract.

There are important statutory limits to the use of information by the unit. For example, information registered with the unit can only be forwarded to a preliminary investigation authority, prosecutor or court on the basis of a written request if the information is significant for the prevention, establishment or investigation of money laundering or a related criminal offence.

If there are sufficient grounds to suspect money laundering, the unit may request additional information concerning suspicious transactions from the credit or financial institution which informed the unit, and from other banking institutions that could be involved and the relevant supervisory authorities.

The unit may obtain relevant information, including information collected in the course of surveillance, from all agencies that are engaged in surveillance.

For the purpose of performing its statutory functions, the unit has the right to make inquiries and receive data from state and local government databases, and to exchange information with foreign agencies that perform the functions of a unit.

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