Non-profit organisations (NPO)

Most non-profit organisations (NPOs) operate as non-profit associations, foundations, federations, political parties or other organisations. NPOs raise, use or relay funds for charitable or advocacy activities or for other ideological, educational or leisure-related purposes, for example.

All or some of their activities are non-profit seeking. Some NPOs also engage in business activities as a taxpayer.

Customer due diligence obligations and risk-based assessments also apply when the customer is an NPO. Non-profit organisations, for their part, can prevent risks in the planning of their activities.

There is a large number of various types of NPOs in Finland. In addition to associations and foundations, the sector includes religious organisations, for example. The document linked below contains a detailed list of the different types of entities that make up the NPO sector.

Classification of the Finnish NPO sector

The obligations of an obliged entity

Monitor your customer relationship with the NPO. This concerns both transactions and the customer’s other behaviour. The purpose of the monitoring is to determine whether the NPO’s transactions and other activities correspond to the customer due diligence information, amongst other things.

The assessment of elevated risk is based on an overall assessment that comprises the information on the NPO obtained from various registers, the nature of its activities and other available information. The risk rating also affects how frequently the information needs to be updated and how closely the NPO must be monitored. The information can also change during the course of the customer relationship.

You can make use of the following information:

  • The organisation’s size, type and scale, including its legal structure, number of personnel and information on the members of the executive committee
  • Nature of activities and geographical location: Are the services offered internationally? Does the NPO engage in cross-border activities? Is there an active threat of terrorism in the vicinity of the area of operation?
  • The purpose for which the NPO was established
  • Funding of operations: How does the NPO obtain funding for its operations?
  • Key financial figures, including the amount of funding, frequency of fund transfers, payment methods

The obligations of a non-profit organisation

Although the Anti-Money Laundering Act does not directly apply to non-profit organisations, you need to comprehensively respond to customer due diligence questions. Sectors subject to the reporting obligation – such as banking and investment, real estate agency, accounting and auditing – have a legal obligation to identify risks related to money laundering and terrorist financing.

It is important to prevent risks in the planning of your own activities.

You can mitigate risks by focusing on the following issues, for example: 

  • Make sure that the registers maintained by various public authorities have up-to-date and reliable information on your activities. Examples of such information include the Finnish Patent and Registration Office’s register entries on the association’s executive committee, rules, accounting reports and the reports of auditors or operations inspectors.
  • Think about internal monitoring mechanisms in advance. You can also draw up a risk assessment on your activities to provide a comprehensive description of the risks associated with your entity’s activities and potential transactions.
  • Make sure that your activities are transparent to both your members and external entities. Engage in open communications on your activities and objectives. Make sure that up-to-date information on your activities and money collection permit is available on your website, for example.