FIN-FSA published AML supervision strategy - effectiveness of sanctions monitoring to be improved by legislative reform
The Financial Supervisory Authority (FIN-FSA) has published a supervision strategy for anti-money laundering. The objective of the strategy is to reduce the risk of money laundering, terrorist financing and breaches of financial sanctions in the operation of supervised entities. In March, the Parliament adopted a partial reform of the Anti-Money Laundering Act, which provides the FIN-FSA with the authority to supervise compliance with sanctions in the financial sector more effectively than before.
The FIN-FSA's anti-money laundering strategy, adopted at the beginning of the year, emphasises a risk-based approach and effectiveness, and it also covers supervision of the prevention of terrorist financing and compliance with sanctions.
– The supervision of money laundering concerns all of our supervised entities and it is based on constant work. If there are suspicions of failures or breaches, we have access to a variety of tools, from reprimand to the withdrawal of authorisation and sanctions, says Pekka Vasara, Head of Division.
The FIN-FSA's preventative role, i.e., communication and guidance, play a key role in the strategy. In recent years, the market has seen an influx of small and international operators of a new kind, which may not be aware of legislative expectations. The objective of supervision is always that supervised entities can operate properly and there is no need for sanctions.
Supervision covers the whole lifecycle of all entities, starting from the application for registration or authorisation. Entities representing the most significant overall risk are subject to ongoing supervision as well annual inspections or thematic reviews.
Sanctions monitoring in cooperation with other authorities
Last year, the Western world imposed unprecedentedly extensive sanctions on Russia after it had invaded Ukraine. Following the partial reform of the AML Act adopted by the Parliament in March, the FIN-FSA will be vested with the authority to supervise compliance with financial sanctions.
– Thanks to the legislative amendment, we will be able to intervene more effectively in any shortcomings and failures, whereas until now we have been supervising indirectly with incomplete authority. We will focus in particular on ensuring that supervised entities have adequate and commensurate processes to monitor their own compliance with sanctions, states Pekka Vasara.
Similarly to other areas of supervision, this effort is also based on cooperation among authorities. The Ministry for Foreign Affairs provides guidelines on the interpretation of regulations on sanctions and processes exemptions related to sanctions. The Enforcement Authority is responsible for the freezing of assets. When an authority suspects, for example, a breach or circumvention of sanctions, it will be examined by the police.
The legislative amendment became effective on 31 March 2023. The FIN-FSA will focus its supervision at a more detailed level when the regulations on compliance with sanctions are finalised.
For further information, please contact Pekka Vasara, Head of Division, Anti-Money Laundering, [email protected]