Hidden Ownership in Suspicious Transactions - Experimental Evidence on AML Reporting Priorities in Norway

Hidden ownership underestimated: Norwegian AML professionals rank origin of funds above beneficial ownership

Concealing who actually owns or controls assets is a core money laundering technique. Shell companies , trusts , nominee arrangements , bearer instruments and other opaque structures let criminals hide the people behind transactions and blend illicit proceeds into legitimate economic activity. Policymakers and international bodies have emphasized beneficial ownership transparency as essential to fighting tax evasion , corruption, sanctions circumvention and organized crime. Yet questions remain about whether the people charged with filing suspicious activity reports (SARs) treat non‑transparent ownership as a top priority when they decide which transactions to report.

What researchers did

A randomized discrete‑choice experiment of 334 Norwegian anti‑money laundering (AML) professionals tested how six transaction attributes influence stated reporting probability and perceived money laundering risk. Each respondent compared eight pairs of hypothetical transactions (16 choices total) where attributes were experimentally varied.

The attributes were:

• difficulty verifying origin of funds;
• difficulty verifying beneficial owner;
• involvement of a high‑risk country;
• presence of a foreign politically exposed person (PEP);
• presence of a domestic PEP;
• adverse media coverage linked to suspicious activity; and
• the likelihood that the reporting entity would keep doing business with the client (a self‑interest test).

Respondents were randomized into two question framings:

1. which transaction is most likely to be reported, or
2. which transaction has the highest money laundering risk.

Bastian Schwind-Wagner _Follow

"Hidden ownership is a critical vulnerability in the fight against financial crime and can enable large‑scale evasion and corruption when left unaddressed. Strengthening beneficial ownership transparency and equipping reporting entities with better access to reliable ownership data will reduce opportunities for criminals to hide behind opaque structures.

Training, clearer supervisory expectations, and targeted enforcement can help align reporting practice with actual risk. Further research should test whether the patterns observed in Norway hold in other jurisdictions and investigate how real‑world incentives and client profiles shape filing decisions."

Key findings

Difficulty verifying origin of funds is the strongest trigger. Transactions where the origin of funds was difficult to verify raised the odds of being reported by far the most. The estimated odds ratio is about 5.5 versus transactions with known, verified funds. That is roughly twice the reporting impact of other major red flags .

Beneficial ownership matters, but less than origin of funds. Transactions with difficult‑to‑verify beneficial owners were estimated to be about 2.8 times more likely to be reported than ones with known, verified beneficial owners. That effect is substantial but only roughly half the impact of unverifiable origin of funds. Beneficial ownership opacity and “high‑risk country” involvement produced similar effects on reporting odds.

Secondary indicators still increase reporting, but to a lesser extent. Involvement of a high‑risk jurisdiction, presence of a foreign PEP, and adverse media coverage all increased reporting odds. Domestic PEP involvement had only a marginal effect.

Self‑interest did not predict deprioritization. The experimental attribute capturing a reporting entity’s prospect of continued business with the client did not significantly change stated reporting probability. Put differently, respondents did not indicate they would withhold SARs to preserve future business in the hypothetical scenarios presented.

Reporting and risk perceptions align. Respondents’ judgments about which transactions are most likely to be reported were broadly aligned with their judgments about which transactions represent the greatest money laundering risk. The only modest divergence was that involvement of a high‑risk country was seen as slightly more reported than its intrinsic risk – an effect concentrated among respondents in the financial sector.

Interpretation and implications

1. Beneficial ownership opacity is underprioritized relative to origin‑of‑funds opacity. The experiment suggests AML professionals in Norway treat an unknown source of funds as a markedly stronger red flag than an unknown beneficial owner. That is important because non‑transparent ownership is one of the most common enablers of large‑scale international evasion and laundering: opaque ownership can conceal who benefits, enable repeated layering and make tracing and enforcement much harder.
2. The result is robust to alternative framings and respondent subgroups. The between‑subjects framing (reporting probability vs. money laundering risk) and block randomization reduce concerns that question order or simple measurement artifacts drove the main result. The alignment between perceived risk and perceived reporting suggests the system is not wildly miscalibrated in respondents’ eyes, but it highlights a consistent relative deprioritization of beneficial ownership opacity.
3. Availability or “script ” explanations are plausible but limited. One explanation is availability bias – professionals emphasize red flags they see more often in SAR statistics or recent cases. Another is that industry socialization and regulatory practice have generated scripts prioritizing origin‑of‑funds evidence. The study’s design mitigates some alternative critiques: attributes were balanced across choice sets and randomized, and many respondents represented non‑financial regulated entities who file fewer SARs but still ranked origin‑of‑funds above beneficial ownership.
4. Self‑interest may be less central than feared – within limits. In the controlled, hypothetical choices the prospect of future business did not reduce reporting propensity. That suggests that, at least in stated preferences among AML professionals, marketplace incentives to preserve clients did not dominate filing choices. Real‑world pressures and incentives may differ, so this should be treated cautiously.

Policy and enforcement takeaways

• Strengthen beneficial ownership transparency and registries. If practitioners – who translate regulation into SARs – systematically give relatively less weight to beneficial ownership opacity than to origin‑of‑funds opacity, then publicly accessible, up‑to‑date ownership registers and mandatory reporting of beneficial owners will reduce the burden on gatekeepers and make it more likely that opaque ownership will be detected and acted on.
• Prioritize enforcement and supervisory focus on ownership opacity. Regulators and FIUs should target supervisory inspections, guidance and enforcement toward how firms verify and escalate unclear ownership. That includes closing legal loopholes (trusts, bearer instruments, nominee setups) and harmonizing cross‑border access to ownership data.
• Invest in training that emphasizes beneficial ownership risk. Practitioners may benefit from specific training and case studies that illustrate the crucial role of beneficial ownership in large‑scale laundering, sanctions evasion and corruption schemes. Clarifying when unknown ownership should drive SARs, even if origin of funds looks plausible, can change reporting behavior.
• Ensure regulators communicate relative priorities clearly. The modest over‑reporting of high‑risk countries found among some financial respondents suggests the need for clear, timely guidance on how to balance jurisdictional risk with other red flags.

Limitations and areas for future work

• Hypothetical choices, not revealed behavior: discrete‑choice experiments measure stated priorities in controlled scenarios. Actual filing decisions occur under pressure, with additional contextual information and consequences absent from an experiment.
• Limited attribute set: the design deliberately limited attributes to reduce cognitive load. Other practical trade‑offs (client size, political influence, revenue concentration) might affect real‑world choices.
• Single country context: Norway has high institutional quality and social trust; results may differ in jurisdictions with weaker governance or larger offshore financial markets. Replication in other countries or cross‑country comparisons would be valuable.
• Self‑interest mechanism needs deeper study: while the simple future business attribute had no effect, richer designs or field experiments could test whether different forms of client value (big contracts, political connections) alter reporting.

Bottom line

AML professionals in this experiment view unknown origin of funds as the dominant trigger for SARs, but they give substantially less weight to unknown beneficial ownership than one might expect given the global policy focus on ownership transparency. Policymakers, supervisors and practitioners should take this as a call to better equip reporters with ownership data and clearer incentives and guidance so beneficial ownership opacity does not remain an underprioritized but major enabler of cross‑border illicit finance.

Dive deeper

• Research ¦ Anne Marthe Bjønness, Ivar Kolstad, Hidden ownership in suspicious transactions - experimental evidence on anti-money laundering reporting priorities in Norway, International Review of Law and Economics, Volume 86, 2026, 106334, ISSN 0144-8188, https://doi.org/10.1016/j.irle.2026.106334. ¦ Link ¦ licensed under the following terms, with no changes made: CC BY 4.0