A Guide to Anti-Money Laundering for Crypto Firms
Finland has one of the largest per capita economies in the European Union and attracts a range of foreign business interests. As a trade hub, Finland also deals with threats to its financial system as criminals seek to exploit vulnerabilities to launder money or finance terrorist activities. In order to combat the threat posed by money laundering, Finland has implemented strict anti-money laundering regulations, including requirements for financial institutions to implement internal AML/CFT compliance programs. Finland’s AML regulations are overseen by the Financial Supervisory Authority (FSA), known in Finland as Finanssivalvonta (Fiva).
Banks, financial institutions, and other obligated entities in Finland should understand their AML obligations and how to comply with FSA requirements.
What is the Finnish FSA?
Established in January 2009, the FSA is the primary financial regulatory authority in Finland and replaced the Banking Supervision Office. An independent regulatory organization, the FSA operates in conjunction with the Bank of Finland, and is headquartered in Finland’s capital, Helsinki. The FSA’s stated objectives are to ensure the safe operation of Finland’s financial institutions, to protect participants in its financial markets, and to disseminate regulatory knowledge. In its supervisory role, the FSA provides oversight for:
- Insurance companies
- Pension companies
- Investment firms
- Fund management companies
- The Helsinki Stock Exchange
The FSA works to combat money laundering in Finland and ensure compliance with the country’s AML rules and regulations. Finland’s primary article of AML/CFT legislation is the Act on Preventing Money Laundering and Terrorist Financing, also known as the Anti-Money Laundering Act. The legislation sets out provisions for detecting and preventing money laundering in Finland, including implementing suitable Know Your Customer (KYC), risk assessment, reporting, and training obligations.
As an EU member state, Finland is also obliged to enact financial legislation passed by the European Parliament. Accordingly, the Anti-Money Laundering Act incorporates the latest requirements of the EU’s anti-money laundering directives, and AML recommendations set out by the Financial Action Task Force (FATF).
Failure to comply with AML/CFT regulations in Finland can result in significant financial and criminal penalties.
Following FATF guidance, firms in Finland must take a risk-based approach to AML/CFT compliance. In practice, this means assessing their customers to establish the level of AML risk they present, and then deploying a proportionate AML response. In order to achieve effective, risk-based AML compliance, Finnish AML programs should feature the following measures and controls:
- Customer due diligence: Firms in Finland must be able to establish and verify the identities of their customers by collecting suitable identifying information and documents, including names, addresses, dates of birth, and tax numbers. Similarly, firms should establish the beneficial ownership of customer entities. Higher risk customers should be subject to enhanced due diligence measures.
- Transaction monitoring: Suspicious transactional behavior is often a good indicator that customers are attempting to launder money. Accordingly, firms should monitor for unusual transaction patterns, transactions that do not match customer risk profiles, or transactions with high risk countries outside Finnish jurisdiction.
- Sanctions and watchlists: Finland does not implement an autonomous sanctions regime, but firms must nonetheless ensure compliance with international economic sanctions by screening their customers against the EU sanctions list and the UNSC sanctions list.
- Politically exposed persons: Elected officials and government employees are classified as politically exposed persons (PEP) and may present a greater risk of money laundering than other customers. With that in mind, firms in Finland should establish their customers’ PEP status in order to inform their risk profiles.
- Adverse media: News stories are often good indicators that customers are involved in criminal activity. Firms should screen Finnish and global media sources for stories that involve their customers, including traditional screen and print outlets and online outlets within the scope of their checks.
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Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.
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