Sharp increase in suspected unlawful transactions in Norway detected by automated money laundering monitoring systems

Oslo - The automated monitoring systems used by Norwegian banks are identifying an ever-increasing proportion of attempted financial crime. The number of suspicious transactions automatically identified by the systems has increased by 30% between 2006 and 2009. These figures are produced by EDB Business Partner, which supplies 140 Norwegian banks with systems for the detection and prevention of money laundering. Cases involving deposits of ’dirty’ money account for the majority of the cases identified.

“While financial crime is on the increase, systems for detecting and preventing money laundering are becoming more efficient. The proportion of suspicious transactions identified automatically is now as high as 76%, up by more than 30% since 2006. Electronic monitoring has opened up entirely new opportunities to detect systematic money laundering, and this extends to small-scale activities as well as large-scale transactions”, explains Magnus Thorburn, Head of Core Systems, Bank & Finance, at EDB.

The use of electronic systems for detection and prevention has so far been concentrated on private individuals. The number of suspicious transaction reports that involved corporate market customers represented just 3% of the total number of suspicious transactions detected in 2009. This may be due in part to the more limited use of electronic systems to target corporate customers.

“In 2008, only 5% of the electronic measures in place targeted corporate customers. This proportion has now increased to 12%. We expect that this will lead to an increase in the number of reported incidents of money laundering involving Norwegian companies”, adds Magnus Thorburn.


Private individuals and unlawful cash transactions

Of the suspicious transactions involving personal customers, 35% relate to cash paid into bank accounts. Social security fraud, payment fraud and “31.12” cases (withdrawals immediately prior to year-end to avoid tax liability) account for a further 9% of the suspicious transactions reported.

Cases reported in respect of personal customers relate to the following areas:
Area -- Proportion
Cash deposits -- 35 %
Large credit turnover -- 10 %
Social security fraud, fraudulent payments, and “31.12” -- 9 %
Transfers to/from abroad -- 5 %
Cases identified manually -- 26 %

High proportion of cases involving building and construction

Figures for 2009 show that corporate customers accounted for only a small proportion of the suspicious transactions that were detected. One in five of these cases involved the building and construction sector. Self-employed business people featured in 23% of the suspicious corporate transactions.

Cases reported in respect of personal customers relate to the following areas:
Area -- Proportion
Large credit turnover on the account -- 38 %
Payments, deposits -- 10 %
Transfers to/from abroad -- 14 %
Large withdrawals -- 32 %
Others -- 6 %

Norwegian banks in the lead with money laundering detection systems

Norway became the first country in the world to require its banks to carry out electronic surveillance of all transactions when it introduced requirements from the start of 2005 to prevent money laundering for terrorist activities and financial criminality. Banks and financial institutions in many countries are now following this example as a result of national and European requirements to report suspicious transactions to the authorities, but these requirements have been in place in Norway for more than five years. Around 76% of the suspicious transactions identified by Norwegian banks in 2009 were detected by automatic systems. The proportion of identified transactions that were detected manually has fallen from 48% in 2006 to just 24% in 2009. Of the transactions identified, 1.3% were forwarded to the Police authorities for further investigation. The Police authorities review these transactions to decide whether to carry out further investigations, and also make decisions on prosecuting offenders through the courts.

How does the money laundering monitoring system work?

The system monitors every transaction carried out through the banks that use the system, and it is programmed to detect various types of transaction that may be suspicious. The department at each bank responsible for money laundering prevention plays a major and important role in investigating the transactions that are flagged by the system to identify whether they indicate a pattern of suspicious behaviour. This makes it very important that the banks have a good understanding of their customers and their business activities, as well as being fully conversant with the latest methods used for money laundering. Each bank using the EDB systems sets its own parameters for the search and monitoring engine to optimise the detection of the type of suspicious transactions that the bank in question considers most relevant.

More about EDB’s statistics

EDB is responsible for IT operations for a major part of the money laundering detection and prevention systems used in Norway. EDB also provides a range of other banking applications, and is the leading supplier of IT services for Norwegian banks and other financial institutions. EDB’s statistics relate to traffic handled by EDB’s systems, which represents a large proportion of the total number of transactions carried out in Norway annually. EDB has estimated total figures for Norway based on EDB’s market share and on the assumption that the remainder of the market has experienced the same trends as those seen for the transactions handled by EDB’s systems.


Further information and facts from EDB’s money laundering prevention statistics can be found at www.edb.com


About EDB

EDB Business Partner is one of the leading vendors of IT services in the Nordic region, with almost 6,000 employees and annual turnover of around NOK 7.5 billion in 2009. The company has almost 50 years’ successful experience of delivering business-critical solutions to customers in both the private sector and the public sector. EDB aims to be a close and attentive partner that leverages its deep industry knowledge and international capabilities to help its customers realise the full potential of IT.

EDB Business Partner ASA is listed on the Oslo Stock Exchange with the ticker code EDBASA.

See www.edb.com for further information.