Financial Supervisory Authority of Norway identifies shortcomings in Marker og Eidsberg Sparebank’s cash related money laundering controls

The Financial Supervisory Authority of Norway has identified weaknesses in Marker og Eidsberg Sparebank’s compliance with money laundering and terrorist financing requirements for cash handling. Deficiencies covered the bank’s risk assessment, operational procedures, customer risk classification, electronic monitoring, customer due diligence and ongoing monitoring. The authority found material weaknesses in investigations and reporting of suspicious activity to the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim). The bank did not assess terrorist financing risk adequately, sufficiently tailor its analysis to customer groups or properly account for weaknesses in its controls when determining residual risk. Customer classifications relied mainly on declared rather than actual cash use, while monitoring rules were too general to capture identified cash related methods and risks. Reviews of 20 customer files found inadequate verification of explanations and sources of funds, as well as failures to update due diligence when actual cash activity differed from expected behavior. In six cases reviewed for investigation and reporting, the bank did not always document how suspicion had been resolved or assess repeat reporting when suspicious cash activity continued. In some cases, activity persisted for more than a year after an initial report without a new report or documented assessment. The authority expects the bank to strengthen its investigation, documentation and reporting processes, while the bank has already revised procedures governing repeat reports of previously reported activity.