Justis- og politidepartementet
Postboks 8005 Dep
0030 OSLO
Att.: Atle Roaldsøy
Date: 30.08.02
Our ref.: 2002/000485 FJA/DR
Your ref.: 02/5635 PPU/ATR
COMMENTS ON THE CONSULTATION PAPER REGARDING REVIEW OF THE FATF 40 RECOMMENDATIONS Reference is made to the consultation paper of 30 May 2002. 1. Introductory remarks The Norwegian Financial Services Association (FNH) represents commercial banks, financial institutions and insurance companies in Norway. FNH has some 45 large and smaller financial companies as members. FNH has, as an industry organisation for financial services, focused on the review of the Recommendations regarding measures applicable to the financial sector. Our comments will therefore be concentrated on chapter 3 of the Consultation paper. 2. Comments to the Consultation Paper In our comments below, we are referring to the respective chapter/ paragraph in the consultation paper. 3.1 Persons or entities to be covered by the FATF 40
FNH support the definition of financial institution as suggested, which we understand is corresponding with the annex 1 to Directive 2000/12EF. Furthermore, FNH trust the definition will include co-operative institutions which receive deposits from the public. FNH also recommend that the national postal service, if involved in transfer of funds and other similar transactions to bank transactions, should comply with the AML regulations. To paragraph 18: FNH agree that there will be an advantage to define financial institutions by a reference to financial activities, rather than on the legal form of entities. If some jurisdictions have to extend their AML (anti-money laundering) framework to adopting this approach, they should be given due date to comply with the new definitions. To paragraph 23: In FNH's opinion, it should not be permitted to exempt minor financial activities from the AML regulations. If such exemptions are accepted, it will be an opportunity for criminal elements to focus their illegal financial activities in this kind of business entities. An alternative solution may be that this kind of business only have to comply within some areas i.e. STR (suspicious transaction report). 3.2 Customer Due Diligence Process 3.2.1. Basic Principles
To paragraph 33: FNH support the recommended obligations. Moreover, FNH suggest that FATF adopts recommendations which ensure that bank/ financial institutions may rely on customer identification done by another institution subject to the AML regulations. Se also comments to chapter 3.4. 3.3 Higher risk customers or transactions FNH supports the adoption of more strict recommendations and guidance regarding so called "high risk" customers and correspondent banks. 3.3.1 Political Exposed Persons
To paragraph 47: FNH recommend Option 3. 3.3.2 Correspondent Banking
To paragraph 57: FNH recommend Option 2. 3.3.3 Electronic and other Non-Face-to-Face financial transactions
To paragraph 77: FNH recommend Option 2. Additional remarks:
The solution recommended in Option 1 will not, from FNHs point of view, adequately help combating ML in Non-Face-to-Face customer relationships as long as the jurisdictions themselves decide what measures are adequate. This would make it difficult to decide whether a jurisdiction comply with regulations or not. In FNHs opinion it is of great importance that FATF work out a requirement of possible measures for managing ML risks in Non- Face-to-Face customer relationships. As long as jurisdictions only would be expected to adopt some of the measures recommended, all jurisdictions should be able to comply with the requirement. To your information, FNH has established a working group for developing a system for monitoring electronic transactions. The group shall deliver a report within this year. FNH will recommend that FAFT adopt recommendations regarding the implementation of a system for such monitoring. 3.4 Simplified Due Diligence Procedures To paragraph 92: FNH recommend Option 3.
To paragraph 95: FNH recommend Option 2. Additional remarks:
FNH recommends that FATF adopts recommendations regarding simplified Due Diligence procedures for customer satisfactory identified by another company in the same financial group. 3.5 Reliance on third parties to perform Identification and Verification obligations 3.5.3 Reliance on third parties (other than outsourcing and agency arrangements)
To paragraph 108:
1. What types of "entities" could be permitted to rely on third parties?
Recommendation: FNH recommend Option 1. 2. Who can be a third party?
Recommendation: FNH recommend Option 3. 3. What level of supervision and regulation is required for the third parties?
Recommendation: FNH recommend Option 3. To paragraph 111: FNH recommend Option 1.
3.6 Other specific issues requiring clarification 3.6.1 Requiring financial institutions to identify all customers, including existing customers
To paragraph 119: FNH recommend Option 1. 3.6.2 Timing of verification of identity
To paragraph 122: FNH recommend Option 1. 3.6.3 Identification when Money Laundering suspected or for occasional customers
To paragraph 125: FNH recommend Option 2. 3.7 Suspicious Transaction Reporting 3.7.2 Feedback for suspicious transaction reporting
To paragraph 131: FNH recommend Option 2.
3.7.3 The scope and the nature of the reporting obligation 3.7.3.1 Indirect reporting
To paragraph 137: FNH recommend Option 1. 3.7.3.2 Reporting on the basis of suspicion or reasonable grounds to suspect
To paragraph 140: FNH recommend Option 2. 3.7.3.3 Attempted transactions
To paragraph 141: FNH recommend Option 1. 3.7.3.4 Suspicious activity
To paragraph 144: FNH recommend Option 1. 3.7.3.7 The criminal activity that should be reported
To paragraph 147: FNH recommend Option 1
3.8 Financial Sector Regulation and Supervision 3.8.2 Regulatory approach
To paragraph 171: FNH recommend Option 2.
Yours sincerely,
Tore A. Hauglie
Director Dagny Raa
Senior legal adviser
Copy:
FATF Secretariat
Att: John Carlzon
2, rue André Pascal
75775 Paris Cedex 16
FRANCE
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