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PR(98)17: Publication of the Money Laundering Report Introduction

3.10.2002

Today, the EFTA Surveillance Authority publishes a report on the implementation of the Money Laundering Directive (91/308/EEC) by Iceland, Liechtenstein and Norway. It is a parallel report to the two reports that the European Commission has earlier prepared on the EC Member States.

Money laundering can be understood as the use of financial systems for the purposes of concealing or disguising the illicit origin of proceeds of crime.

Two international treaties - the Vienna Convention from 1988 and the Strasbourg Convention from 1990 - lay down provisions on penal means and international cooperation to combat money laundering. Iceland and Norway have signed and ratified both Conventions. Liechtenstein has signed the Strasbourg Convention and has plans for its ratification.

Through the Money Laundering Directive, the European Community aims at preventing money launderers from taking advantage of the single financial market, the free movement of capital, and the freedom to provide financial services which the internal market entails. 

The Directive has two main objectives.  First, it provides that EEA States shall ensure that money laundering is prohibited.  Secondly, the Directive lays down a number of obligations for credit and financial institutions to prevent those institutions from being used for the purpose of money laundering. 

The content of the report

The report is based on a conformity assessment conducted by the Authority on the transposition of the Directive by Iceland, Liechtenstein and Norway and discusses in 10 chapters such questions as:

  • the institutions and undertakings covered by the national measures on prevention of money laundering,
  • the rules on the identification of the customer,
  • the various duties to provide information to the national authorities responsible for combating money laundering, and
  • the national measures imposing penalties on the act of money laundering, and on the non-compliance with the national measures transposing the Directive's other provisions.

Five annexes are attached to the report.

Annex A lays down the present status of signature, notification and implementation of the Vienna and Strasbourg Conventions.

Annex B shows which criminal offences are covered by the EEA States´ anti-money laundering operations.

Annex C shows the number of suspicious transactions reported to the authorities in the three EFTA States and the number of convictions and prosecutions.

Annexes D and E set forth a general table of correspondence and a table of sanctions referring to the national measures which transpose the Directive's provisions. 

The main national implementation measures

The individual provisions of the Money Laundering Directive have been implemented in all the three States by a number of national measures.

In Iceland, money laundering is criminalised in the General Penal Code of 1940, as amended in 1997. Most of the provisions of the Directive are transposed in the 1993 Act on measures against money laundering and in the Regulation by the Ministry of Commerce on the role of financial institutions in measures against money laundering.

In Liechtenstein, money laundering is criminalised in the Penal Code, which was amended in 1996 in order to implement the Directive. The main national measures transposing the provisions concerning credit and financial institutions are found in the Due Diligence Act.

To comply with the Directive, the Norwegian Penal Code of 1902 was amended in 1993.  Other basic provisions transposing the Directive are laid down in the 1988 Act on Financial Activity, as amended in 1996.  On the basis of the Act, the Ministry of Finance issued in early 1994 a Regulation on identification control and measures against money laundering which has been subject to several modifications and amendments.


 Penalties for money laundering

In Liechtenstein the penalty for the act of money laundering is imprisonment for a period not exceeding two years, or up to 360 day-fine units. A penalty of imprisonment for a period between six months and five years is prescribed for money laundering, when the act relates to a value of over about ECU 90.200 or is committed by a member of a criminal organization.

In Icelandic money laundering is punishable with fines or imprisonment for a term of up to two years.  A repeated or grave offence is punishable with imprisonment for up to four years.  If the offence is related to a violation of the Addictive Drugs Act, the punishment can be imprisonment for up to ten years.

In Norway the penalty for money laundering is fines or imprisonment for a term of up to three years.  An aggravated offence is punishable with imprisonment for a term not exceeding six years.  However, if the offence is concerned with the proceeds of a drug offence, imprisonment for a term not exceeding 21 years may be imposed under especially aggravating circumstances. If the violation is committed by negligence the penalty is fines or imprisonment for a term of up to two years.

Conclusions regarding the implementation

In general, the Authority considers the implementation of the Directive to be very satisfactory in all the three States.  In some instances the national measures implementing the Directive actually provide a more comprehensive regime than the one laid down by the Directive.

In only one case, the EFTA Surveillance Authority has initiated infringement proceedings due to improper implementation.  According to the Liechtenstein Penal Code sanctions in respect of money laundering are not applicable if the conduct concerns 15.000 Swiss Francs or less. The Directive does not contain any provision that would allow such a monitory threshold. This provision has its background in the Austrian Penal Code which contained this kind of a monetary threshold. Austria has now deleted the threshold from its legislation and the Liechtenstein Government has announced that it will approve a proposal for abolishing the threshold by an amendment of the Penal Code.

Statistics regarding reports on suspicious transactions, prosecutions and convictions

Annex C of the report provides information of the number of suspicious transactions reported to the authorities in the three States and the number of convictions and prosecutions is shown in. The information is as follows:

                                                 1994    1995   1996    1997
                                                            
Iceland

- number of reports                       2         9          2        11

- number of cases which lead to:
- prosecution                                 0          0          0         0
- conviction                                    0          0          0         0

Liechtenstein[1]

- number of reports                       -           -           -       18

- number of cases which lead to:
- prosecution                                 -            -          -        16
- conviction                                    -            -          -    Pending[2]

Norway[3]

- number of reports                     160       253     164     727 

- number of cases which lead to:
- prosecution                                   1           7       13       22
- conviction                                      1           1       11      13


[1] There are no numbers for the period from 1994 to 1996, because the Due Diligence Act entered into force on 1 January 1997.
[2] 14 of the 16.
[3] Of the 1304 reports received in the above period 504 still were under preliminarily examination by the Money Laundering Unit at the end of 1997.




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