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The New Finnish Anti-Money Laundering Act Enters into Force

  • Finland
  • Other

27-07-2017

The anti-money laundering legislation entered into force 3 July 2017: what does every entrepreneur or a larger business need to know about the coming amendments?

1.    Does the new Act apply to your business?

The scope of businesses affected by anti-money laundering regulations has been enlarged with the new Act. In short, most banks and other financial institutions, insurance companies, auditors, law firms, real estate brokers and various consultancies are included in the concept of obliged entities (in Finnish: ilmoitusvelvollinen) and thus affected by the Act. The new legislation broadens the concept of obliged entities to cover e.g. gambling operators with certain exceptions. The new Act also applies to sale of goods, if the buyer makes a payment worth more than 10 000 EUR in cash.

Another aspect enlarging the scope of application of the law derives from the concept of politically exposed persons (PEPs): The Act makes no difference between domestic politically exposed persons, their family members and close business partners with foreign equivalents.

2.    All entities shall register the true beneficial owners

Even if a business does not meet the requirements of an obliged entity, it should be noted that the following obligations to register the beneficial owners apply to all entities who are obliged to register themselves in the Finnish Trade Register with some minor exceptions. These entities are obliged to maintain records and register any private individual holding a significant ownership in an enterprise or any other true beneficiary. The register is operated by the Finnish Patent and Registration Office.

The beneficial owners shall be registered by 1 July 2020.

A true beneficiary or a beneficial owner shall mean any private individual who owns more than 25 % of the shares or votes in a legal entity or otherwise exercises significant control therein. If the beneficial owner of a company is another legal entity, the company shall find out which private individuals are entitled to make independent decisions on behalf of the beneficial owner. It should be noted that significant control may derive from e.g. a shareholders’ agreement and it is not only subject to a significant ownership. In some cases, board members are considered to be the beneficial owners of an entity.

When conducting know-your-customer (KYC) measures, the obliged entity shall identify the beneficial owner of its customers. However, if the customer is a listed company, its beneficial owner does not need to be identified.

3.    Who in your organization is responsible for anti-money laundering compliance?

As the regulations have now been updated in Finland to meet the requirements of the 4th Anti-Money Laundering Directive, it is a good time for all businesses to refresh their compliance organization. According to the Act, some entities have an obligation to appoint a special contact person to be responsible for AML compliance. Irrespective of a business being an obliged entity or otherwise affected by the legislation, it is advisable that an internal compliance officer is appointed in any case in order to ensure efficient compliance.

4.    Have you carried out and documented a risk assessment?

The obliged entities shall prepare a risk assessment involving analysis of any money laundering and terrorism financing risks their business is susceptible of. The competent authorities are entitled to request the obliged entities to provide their risk assessment documents for review. The risk assessment shall be updated regularly.

The deadline for conducting the statutory risk assessment is 31 December 2017.

1.    Have you updated your policies and trained your staff?

The obliged entities shall have adequate policies, procedures and controls in place in order to mitigate the risk of money laundering and terrorist financing. The Act imposes a minimum standard for the compliance policy, procedures and control.

The Act also obliges the obliged entities to train their staff in order to ensure compliance with the Act.

2.    Does your business have a whistleblowing channel?

Businesses should set up an independent and anonymous whistleblowing channel for reporting any suspected breaches of regulations. In addition to establishing the channel itself, it is advisable to adopt a proper compliance policy for its use and pay attention on the technical execution of the whistleblowing measures.

3.    Sanctions

The new Act proposes a new sanctions regime. A legal entity may be imposed a fine of
5 000 - 100 000 EUR, whereas a private individual may be imposed a fine of 500 - 10 000 EUR.
In addition to the fine, the Act also includes provisions on administrative penalties.

It should also be borne in mind that money laundering is a criminal offence, due to which the criminal sanctions included in the Finnish Penal Code apply if an offence is committed.

Should you have any further questions about anti-money laundering or other compliance topics, do not hesitate to contact marja.boman@eversheds.fi

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