Roles of stakeholders
The Ministry of Finance and the Ministry of the Interior are the ministries responsible for the prevention of money laundering and terrorist financing. Other key ministries involved in this work are the Ministry of Justice, the Ministry for Foreign Affairs, the Ministry of Economic Affairs and Employment, and the Ministry of Social Affairs and Health.
The Ministry of Finance is responsible for the Anti-Money Laundering Act, the regulations issued and the national risk assessment of money laundering. The Ministry of Finance is also responsible for coordinating the international instructions and regulations on money laundering issued by FATF (Financial Action Task Force on Money Laundering) and the EU on the national level.
The Ministry of the Interior is responsible for the Act on the Financial Intelligence Unit and the statutes issued under it as well as for the preparation of the national terrorist financing risk assessment. The Ministry of the Interior is also responsible for the action plan for the National Strategy for Tackling the Shadow Economy and Economic Crime.
The Ministry for Foreign Affairs is responsible for coordinating the implementation of the UN and EU financial sanctions in Finland.
Cooperation in the EU for preventing money laundering and terrorist financing
In the European Union, issues related to the prevention of money laundering and terrorist financing are dealt with by the Economic and Financial Affairs Council (ECOFIN Council) and in the Committee on Economic and Monetary Affairs of the European Parliament (ECON).
The Ministry of Finance participates in the meetings of the EU’s Financial Services Committee and Economic and Financial Committee, which also deal with the prevention of money laundering and terrorist financing at a strategic level. The Committees also prepare matters to be dealt with by the ECOFIN Council.
EU’s legislation on money laundering and terrorist financing including the associated monitoring and collaboration structures are currently undergoing reform. During Finland’s EU presidency, the ECOFIN Council approved the strategic focuses of the reform, and in May 2020 the European Commission published an action plan on their implementation. The Commission is expected to publish a legislative proposal on the reform in early 2021.
Cooperating and issuing recommendations at the international level
The intergovernmental Financial Action Task Force known as FATF operates under the OECD. FATF cooperates internationally to prevent money laundering and the financing of terrorism and weapons of mass destruction. Finland has been a member of FATF since 1991.
FATF develops and issues recommendations. It follows their implementation in the member states with annual inquiries and periodic country evaluations.
FATF has issued 40 recommendations concerning the prevention of money laundering, terrorist financing and financing of proliferation of weapons of mass destruction, which the Member States are politically committed to implement. The recommendations were last revised completely in 2012 and individual specifications have been made to them even after that.
FATF maintains lists of states whose anti-money laundering and anti-terrorist financing systems contain strategic shortcomings. Up-to-date information and criteria for listing are available on the FATF website.
Maintaining an account register
The bank and payment account control system provides the authorities with electronic information on accounts maintained by Finnish credit institutions, payment institutions, electronic money institutions and virtual currency providers as well as branches of foreign entities situated in Finland.
The control system consists of the bank and payment account register maintained by Customs and the information retrieval systems maintained by obliged entities.
Credit institutions must maintain electronic information retrieval systems that collect information on the bank accounts, payment accounts and safe-deposit boxes maintained by the institution. Other obliged entities can maintain an information retrieval system or forward the data to the account register maintained by Customs.
Competent authorities request the information they require from the Customs’ account register or the information retrieval systems.
Registration of beneficial owners
The Finnish Patent and Registration Office is responsible for registering information on the beneficial owners of companies and updating the trade register accordingly. In most cases, the beneficial owners of a company are its owners.
Most companies have to report their beneficial owners to the Patent and Registration Office and keep the data up to date in the trade register. A company obliged to report must submit a beneficiary report even if the company has no beneficiaries or if the company does not know who they are. This information is collected in the trade register.
In order to keep the data up-to-date, the obliged entities, the authorities monitoring compliance with the Anti-Money Laundering Act and the Finnish Bar Association must notify the Patent and Registration Office if they discover shortcomings or inconsistencies in the beneficiary information in the trade register.
Imposing the administrative sanctions in the Anti-Money Laundering Act
Supervisory authorities can impose administrative sanctions on obliged entities for neglect of the obligations laid down in the Anti-Money Laundering Act and breaches of the Anti-Money Laundering Act. The administrative sanction will be imposed by the authority monitoring the obliged entity. For some violations of the Funds Transfer Regulation, the sanction will be imposed by the Financial Supervisory Authority.
The administrative sanctions are a public warning, administrative fine and a penalty payment. A public warning may be imposed if the overall assessment does not give rise to a harsher sanction. The same applies to the administrative fine. Serious violations result in a penalty payment. The administrative fine and penalty payment is ordered to be paid to the State.
The magnitude of the administrative fine and penalty payment is based on an overall assessment that considers, among other things, the nature, extent and duration of the violation. The magnitude of the fine and payment also depends on whether the obliged entity is a legal person or natural person.
The administrative fee imposed for a legal person is a minimum of EUR 5,000 and a maximum of EUR 100,000. The administrative fee imposed for a natural person is a minimum of EUR 500 and a maximum of EUR 10,000.
The maximum amount of the penalty payment is either double the benefit obtained with the violation or EUR 1 million, whichever is greater. However, the maximum amount of a penalty payment imposed by the Financial Supervisory Authority to a credit institution is either 10 per cent of the preceding year’s turnover or EUR five million, whichever is greater.
Instead of a legal person, a penalty payment may be imposed on a natural person who is a member of the management of the legal person and has significantly contributed to the violation or negligence. However, a penalty payment cannot be imposed on a natural person for an act that is punishable by law. The maximum penalty payment imposed by the Financial Supervisory Authority on a natural person is EUR 5 million.
Examination, exposure and prevention of money laundering and terrorist financing cases
The Financial Intelligence Unit operates in connection with the National Bureau of Investigation. Its task is to prevent, expose, examine and bring into investigation money laundering and terrorist financing. Among the tasks of the Financial Intelligence Unit are the reception and analysis of notifications on suspicious business operations, the possible initial police investigation and bringing the notifications to preliminary investigation.
The Financial Intelligence Unit collaborates with domestic and international actors and authorities to investigate its cases. The Unit also draws up the national statistics and annual report on money laundering and terrorist financing.
The Unit may freeze the assets of a natural or legal person when there is reason to suspect that the person has committed a terrorist crime. The purpose of the freezing of funds is to prevent their use for carrying out, attempting to carry out or preparing for terrorist acts.
The assets may be frozen at the request of an authority of another state. Furthermore, the assets of people, groups and corporations involved in terrorist acts and jointly agreed by the European Council may also be frozen.
Monitoring of obligations laid down in the Anti-Money Laundering Act
By virtue of the Anti-Money Laundering Act, the obliged entities are monitored by the following authorities
Financial Supervisory Authority: obliged entities of the financial sector
National Police Board of Finland, Gambling Administration: gambling operators in mainland Finland
Finnish Patent and Registration Office: auditors
Regional State Administrative Agency for Southern Finland: other obliged entities
Ålands lotteriinspektionen: gambling operators in the Åland Islands
Finances of Åland: Real estate agencies in Åland
In addition, the Finnish Bar Association supervises attorneys-at-law.
The duty of care means the general obligation of certain authorities to take into account in their operations the prevention and exposure of money laundering and terrorist financing and report suspicious business activities to the Financial Intelligence Unit. The duty of care applies to the Finnish Tax Administration, Customs, Border Guard, enforcement authority and the Ombudsman for Bankruptcy Cases.
The Finnish Tax Administration takes money laundering into account in its preventative efforts against the shadow economy and in its various control measures. In addition, the Tax Administration supports authorities that combat money laundering by publishing Obligation Compliance Reports drawn up by the Working group on the Shadow Economy. The indicators of money laundering are mostly the same as the corresponding risk factors in the shadow economy, tax fraud and economic crime.
Preventing and combating the most serious threats to national security
The duty of the Finnish Security and Intelligence Service is to prevent and combat the most serious threats to national security, such as terrorism.