Hidden Ownership in Suspicious Transactions - Experimental Evidence on Anti-Money Laundering Reporting Priorities in Norway

Concealing illicit funds through hidden ownership is a well-known money laundering method. This paper analyzes whether non-transparent ownership receives sufficient attention relative to other red flags of money laundering, using a randomized discrete choice experiment of 334 Norwegian anti-money laundering (AML) professionals. The results show that while unknown beneficial ownership increases the odds that a transaction is reported as suspicious, it increases reporting odds by only about half as much as unknown origin of funds. This suggests that although non-transparent ownership is considered a primary red flag of money laundering, and despite the increased attention this issue has received by international policymakers, non-transparent ownership may still receive insufficient attention by AML professionals. Paradoxically, our analysis indicates that industry professionals consider the AML reporting system to be well-functioning as there are no major differences between which transactions respondents say are reported and which transactions should be reported to combat money laundering. • Randomized discrete choice experiment of 334 Norwegian anti-money laundering professionals • Unknown origin of funds is the most important red flag for a transaction to be reported as suspicious • Non-transparent ownership may receive insufficient attention by anti-money laundering professionals • No major differences between which transactions are reported, and which transactions should be reported to combat money laundering • Industry professionals consider the anti-money laundering reporting system to be well-functioning