In Norway, investigation and enforcement of white-collar crime in Norway has traditionally been handled by the police and prosecution services – spearheaded by the National Authority for Investigation and Prosecution of Economic and Environmental Crime (ØKOKRIM). ØKOKRIM is a combined investigative (police) and prosecutorial (prosecution service) institution. Today, there is a trend towards other administrative agencies being given increased enforcement powers.
Administrative Bodies and Sanctions
In recent years, the Norwegian government has taken initiatives to increase the use of administrative corporate sanctions. In the government's action plan against economic crime, there are also expectations of increased interaction between the police and the control agencies. Particular attention will be paid to the police's ability to follow up reports from the control agencies, including the organisation of the police's efforts in this area. Overall, there are calls for increasing efforts to combat financial crime in Norway.
As a result, there has been a development towards considerable investigative and sanctioning powers being placed with administrative bodies, such as the Financial Supervisory Authority (FSA), the Norwegian Competition Authority (NCA), the Labour Inspection Authority (LIA), the Data Protection Authority (DPA) and the Gambling and Foundation Authority. While some of these bodies have imposed very significant administrative sanctions in recent years, the role of administrative sanctions in the overall Norwegian enforcement regime is still at an early stage. There is clearly a strong trend in EU/EEA law calling for effective administrative sanctions in a range of regulatory areas.
Administrative investigations and sanctions are well established in tax offences. As the tax authorities are generally granted more resources than police and prosecutorial authorities, there has been a shift towards the tax authorities taking a leading role in investigating and sanctioning matters previously dealt with by the police. In the more serious cases, co-operation structures are implemented, whereby personnel from the tax authorities (technically representing the victim of an alleged crime) are embedded within the police and prosecution during the investigation and trial of the alleged tax fraud.
During the first part of the 2010’s, the prosecution service, in close co-operation with the tax authorities, prosecuted two high-profile tax fraud cases, leading to acquittals in 2016. Both cases were based on aggressive interpretations of tax law from the tax authorities’ and the prosecution services’ side. In the aftermath, considerable criticism was raised against the lack of sufficient independence between the administrative authority and the investigative and prosecutorial authorities. While no similar cases have been prosecuted since 2016, the co-operation structures established between the administrative body (ie, the victim) and the police remains operative. This gives rise to continued concerns from the legal profession over the independence of the prosecutorial services.
Labour Crime Joint Investigation Units
As part of the government’s plan to combat economic crime, it has established regional labour crime joint investigation units, co-ordinating personnel from the police, the LIA, the Tax Authorities and the Labour and Welfare Administration. These units mainly focus on a variety of crimes committed within the construction industry, tax and VAT fraud, illegal workers and money laundering.
Corporate Criminal Sanctions, Relevance of Compliance Measures and Self-Reporting
Historically, the main focus in Norwegian white-collar crime prosecution has been on imposing custodial sentences on individuals rather than financial sanctions on legal persons. Under Section 27 of the Norwegian Criminal Code, financial criminal sanctions (fine and confiscation) can be imposed on a legal person if someone acting on behalf of the legal person has violated a criminal statute.
There has been an increase in corporate criminal penalties since the current provision was introduced 20 years ago, both in terms of orders imposed by the prosecution and penalties imposed by the court. In an increasing number of ØKOKRIM cases, fines have been issued against enterprises, together with individuals being prosecuted. In decisions handed down by the Supreme Court, the general justification for the imposition of penalties is based on general lack of compliance and weak corporate governance.
Norway does not have any formal system of plea bargaining, nor does it have one for deferred prosecution agreements. In light of the trend towards more use of financial sanctions against legal persons, the question of how self-reporting and compliance measures shall be considered when determining if a sanction is to be imposed, as well as the severity of the sanction, becomes more important. While the Criminal Code and decisions from the Supreme Court call for compliance measures to be considered in the assessment, there is currently little legal certainty as to the significance of self-reporting.
In 2021, the Norwegian Department of Justice published a consultation paper with proposals for changes to the legislation on criminal sanctions against legal persons. A main objective of the proposal is to make corporate criminal sanctions mandatory unless the legal person can show that it could not have prevented the offence by way of guidelines, instruction, control or other measures. Further, it is proposed to make sentencing relative to the turnover of the legal person. It is also proposed to enact a rule stating that the fine shall be reduced where the legal person has engaged in self-reporting.
The consultation process finished in January 2022. It is expected that the Department of Justice will make a proposal for new legislation to the parliament along the lines of the consultation paper, but the timing is unclear.
Securities Market Abuse
Since the early 2000’s, the Oslo stock exchange, the FSA and ØKOKRIM took proactive steps to combat the tendency of the Oslo Stock Exchange to be what was considered an “insider trading venue”. ØKOKRIM set up its own securities team, specialising in combatting insider dealing and market manipulation. The stock exchange also employed an extensive market supervision team, which initiated a string of cases that led to high profile prosecutions and convictions.
In recent years, most of the market supervision activity has been transferred from the stock exchange to the FSA, and after restructuring at ØKOKRIM there is no longer a specific securities team. ØKOKRIM also suffered some high-profile defeats in market manipulation cases. At the same time, the FSA has been granted new administrative sanction powers under the Market Abuse Regulation. While few enforcement actions have taken place thus far, the FSA is expected to increase its activity as the primary enforcer of the market abuse rules.
Norway has a very open economy with extensive exports and business activity abroad. Many companies operate in industries that are exposed to corruption, such as the oil and gas sector, shipping, arms trade, and telecommunications. Large parts of Norwegian seafood exports also go to countries that are ranked far down on Transparency International's corruption perceptions index. ØKOKRIM gives high priority to combatting corruption. Gross corruption is highlighted in ØKOKRIM's threat assessment, and corruption involving public officials in central and local government is given special attention.
Two decisions handed down in 2022 outline the interpretation of the condition of corruption provisions in the Criminal Code that a benefit must be granted “on the occasion of” the recipient's position, office, or assignment to be considered corruption.
The first decision, handed down by the Supreme Court ‒ HR-2022-1278-A ‒ concerned an architect who had provided free architectural services to a municipal planning official. Both the architect and the official were charged with gross corruption. They were acquitted in the Court of Appeal, which held that evidence of causation between the benefit and the beneficiary's position had to be adduced. Based on the evidence, it could not be ruled out that the services were provided to the official in his capacity as a private individual, unrelated to his position. The Supreme Court stated that the term “on occasion of” indicates a requirement of association or connection between the performance of a benefit and the position held by the recipient. This link must have a certain strength and be clear. However, there is no requirement for direct causation between the benefit provided and the position of the recipient of the benefit. Effectively, the Supreme Court introduced a materiality test, thus adding further flexibility – and uncertainty – to the interpretation of the corruption provisions of the Criminal Code.
The case is scheduled for retrial following the Supreme Court’s ruling.
In the second decision, handed down by the Court of Appeal, a mayor was acquitted of corruption for a benefit she had received in the course of a private business relationship. The court found that the benefit, the sale of some inventory, had not been granted “on the occasion” of her office as mayor. The court stated that the requirement that the transfer of benefit has taken place “on the occasion of” the receiver's position, office or assignment is an objective condition of criminal liability. Consequently, evidence must be provided that the benefit transferred is related to the recipient's performance of a position, office or assignment. Conversely, the criteria cannot be understood as a presumption that a benefit given to someone holding a position, office or assignment is “in connection” with it. A key aspect of the affiliation assessment will be the temporal relationship between the performance of the benefit, and a situation where the official could make a decision of significance to the person who provides the benefit. Other key factors will be the nature of the recipient's position, as well as the type and value of benefit provided.
Proceeds of Criminal Activity ‒ Criminalisation and AML standards
Since 1993, any kind of receipt or dealing with proceeds of a crime is criminalised in Norway, either under the crime of heleri (derived from the old crime of buying or receiving stolen goods), or under the crime of laundering of proceeds of a crime. Even if it is a prerequisite for criminality that the assets in question are actually proceeds of a crime, the Supreme Court held in 2006 that the prosecution does not need to prove the crime or even the kind of crime that amounted to the predicate offence. Hence, the question to be proved by the prosecution is limited to whether legitimate access to the assets can be ruled out. The consequence is that the burden of proof often de facto falls upon the defence.
As long as an asset is classified as a “proceed of a crime”, almost any kind of interaction with such proceeds, for example sending, receiving, securing, transporting, storing, etc, are covered by the statute. Given the wide scope of actions that might constitute laundering of proceeds, the focus has recently shifted to defining what constitutes “proceeds of a crime” and at what point in time such proceeds come about and can thereby be the object of money laundering.
Even if the statue clearly calls for a causal link between the predicate offence and the asset that the defendant has dealt with, there have been some contradicting cases from the Supreme Court lately.
In HR-2021-987, the Supreme Court held that the requirement of the proceeds being derived “of” a crime meant that the crime needed to have been committed prior to the dealing with the proceeds. Hence, dealing with cash flow that would give rise to reporting obligations at a later stage (ie, tax and VAT returns) was not held to be proceeds “of” the later crime of tax fraud.
However, in HR-2022-1319 and HR-2022-1320, the Supreme Court based its sentencing on the gross unreported cash flow in two cases regarding laundering of proceeds of crime. As opposed to the 2021 case, these cases related to the laundering of proceeds of criminal activity where others were deemed to have committed the predicate offence. This differentiation between “self-laundering” and third-party laundering is inconsistent with the operative provision of the statute, clearly requiring a causal link between the predicate offence and the proceeds.
Forfeiture in Laundering Cases
In relation to a conviction for money laundering, the prosecution will also be able to request forfeiture of the assets, arguing that they have been the object of money laundering (corpus delictus). Alternatively, assets may be forfeited on the basis of being proceeds of a specific predicate offence, but that will often be a more burdensome process for the prosecution, as it requires that a link between the predicate offence and the asset to be forfeited is established.
In line with international and EU developments in the AML area, Norway has implemented the EU/EEA Fourth AML directive, establishing a wide range of reporting and KYC obligations on the financial sector, as well as on other sectors.
The FSA is tasked with monitoring compliance with the KYC and reporting obligations, while the Norwegian Financial Intelligence Unit is established as a division of ØKOKRIM.
In recent years, both the number of sanctions and the size of administrative fines have increased significantly. For instance, in April 2021, a major Norwegian bank was given an administrative fine of NOK400 million for insufficient implementation of control mechanisms for money laundering prevention. Both the number and severity of those sanctions will likely continue to increase in the coming years.
Given the large presence of the international oil and energy sector, Norway has traditionally been among the first to adopt international practices with regard to good governance and corporate compliance. This trend has also been furthered by the relatively large state ownership among Norway’s largest companies. Moreover, the relatively early establishment of a specialised financial crime unit within the national prosecution service, ØKOKRIM, has encouraged Norwegian corporate institutions to adopt extensive compliance programmes. This development has in turn led to similar compliance regimes being adopted in the public sector.
Private investigations are used extensively when allegations of organisational misconduct surface. Such investigations have been carried out by law firms as well as the Big Four audit firms.
Recently, the Norwegian Bar Association published a consultation draft for revised guidelines for corporate investigations. The draft has raised a concern regarding the independence of the firms conducting such investigations, as the draft requires that the client should only be advised to choose a firm other than its regular law firm in “special circumstances”. This firm, as well as others, has suggested that the main rule should be the opposite: that the client should choose a firm other than its regular firm to ensure the required level of independence from the client and its management.
This firm has also suggested other measures, particularly directed at ensuring the rights of all parties involved in the investigation, including the persons who are the subject of the allegations.