Regnskap Norge Urges Government to Intensify Action Against Financial Crime
Rune Aale-Hansen, CEO of Regnskap Norge, speaks out on the necessity of stronger measures against criminal activity. Following the Finance Minister’s announcement to abolish the 1,000 krone note, he remarks, “While discouraging cash usage is a vital step, it alone won’t extinguish the fire.”
In a recent press release, Aale-Hansen expressed his organization’s concern for measures that can effectively thwart financial crime. He pointed out that a reduced reliance on cash could alleviate administrative burdens for businesses, potentially saving the economy several billion kroner.
Finance Minister Jens Stoltenberg has requested Norges Bank to phase out the 1,000 krone note, while also proposing a reduction in the cash payment threshold to 10,000 kroner. This initiative comes amid DNB’s latest threat assessment, which highlights a disturbing rise in cash transactions within the business sector.
DNB’s Stark Warning
DNB’s newly released threat report indicates alarming trends. It states, “Analyses conducted alongside Økokrim reveal a significant increase in cash deposits among corporate clients, particularly in the retail sector. This trend suggests that cash derived from criminal activities is increasingly being funneled into Norwegian businesses.”
Simultaneously, the Ministry of Finance is considering the removal of the 1,000 krone note and is set to consult on altering cash payment limits.
Aale-Hansen acknowledges the merits of the Finance Minister’s proposals but insists on more decisive action. He argues, “While it’s commendable to remove the 1,000 krone note and lower cash thresholds, I believe Stoltenberg should consider a more cautious approach. Cash still serves an essential purpose in emergencies, enabling transactions for vital goods like food and medications during system outages. A limit closer to 2,000 kroner would discourage purchases of luxury items while also preventing panic hoarding during crises.”
He further advocates for measures that would prohibit cash payments for luxury goods, a move designed to complicate the laundering of illicit funds.
Challenges in a Cashless Society
Despite a long-term decline in cash use, Aale-Hansen acknowledges the recent uptick in cash transactions within corporate settings as troubling. He attributes this trend to the increased infiltration of criminal funds into the country, likely exacerbated by tighter restrictions on cash handling from abroad.
“If we are to transition away from cash, we must ensure robust contingency plans are in place,” he urges. Aale-Hansen notes that the financial industry has been proactive, with a working group established by the Ministry of Finance presenting measures aimed at reinforcing preparedness for situations where card payments may falter. He stresses the urgency of accelerating this initiative to provide reliable alternatives to cash.
Significant Potential Savings for Businesses
A comprehensive ban on cash as a payment option could be a powerful tool in the fight against financial crime, Aale-Hansen contends. He claims this step could reduce the administrative burden on businesses—estimated at around 10 billion kroner—potentially dropping to 5 billion when considering essential services like grocery stores and pharmacies.
Research by Norges Bank underscores the cost disparity between cash and card transactions. Processing a card payment averages 4.8 kroner, whereas cash transactions tally a staggering 19.2 kroner, illustrating a fourfold increase in expense.
Despite cash accounting for merely 1.4% of daily transactions in Norway, businesses remain obligated to accept it. However, they face numerous restrictions regarding its use themselves, such as being limited to bank account payments for salaries. Notably, any business purchasing items exceeding the 10,000 kroner mark in cash forfeits tax deductions.
As Aale-Hansen succinctly puts it, “The government must reconsider the role of cash in our economy. If we’re to grapple effectively with financial crime, we need coherent, forward-thinking policies.”