Mar.30, 2010, 03:54:16 AM GMT

OSLO, March 29 (Reuters) - A Norwegian police investigation into alleged carbon tax evasion is widening its scope into money laundering, with five men charged, Oslo police said on Monday.

The Norwegian authorities' investigation is part of a wider probe into tax fraud relating to carbon emissions trading that European police agency Europol said cost treasuries up to 5 billion euros ($6.72 billion) in lost revenues.

"We have three arrested and five charged ... Altogether it's six companies (we are investigating)," said police superintendent Boerre Walderhaug, head of the finance and environment unit at Oslo police.

He declined to name any of the suspects.

Norwegian investigators previously said that two men had been arrested and around five companies were being probed.

"All five men are charged with both tax fraud and money laundering," Walderhaug told Reuters on Monday. Norwegian tax authorities previously said that the charges were for tax fraud.

Walderhaug declined to say which illegal activity the laundered money was from, but said it amounted to some 260 million Norwegian crowns ($43.13 million).

The tax fraud amounted to some 127 million crowns, Norwegian tax authorities previously told Reuters, bringing the totalto 387 million Norwegian crowns.

CAROUSEL FRAUD

The investigation is looking into so-called carousel fraud related to the European Union's Emissions Trading Scheme.

Carousel fraud occurs when goods, in this case greenhouse gas emissions credits, are bought and imported tax-free from other EU countries, then sold to domestic buyers, charging them VAT.

The sellers then disappear without paying the tax to governments.

Oslo police said they were seeking two individuals on top of the three already arrested.

Walderhaug said one of the two was a 31-year-old Swedish man who lived in the Norwegian capital. "We have been in contact with Swedish police," said the superintendent.

The other man charged but not arrested was a British citizen. "We have not yet been in touch with British police (about him)," said Walderhaug, declining to say whether they would.

The six companies under investigation were all registered in Norway, but Oslo police were also making inquiries outside the Nordic country.

"We are looking for answers abroad," Walderhaug said, declining to say which countries were involved.