Compliance Network

#ILoveCompliance #Compliance

Event date

15 Nov


Share this

Dittmar & Indrenius > Insight > Compliance Network

In November Compliance Network focuses on Internal Audit and the EU’s Fifth Anti-Money Laundering Directive in Finland.

Further information: [email protected]

Latest Insights

Government Proposal to implement EU's Fifth Anti-Money Laundering Directive in Finland
4 Oct 2018 The Finnish Government proposal implementing the provisions of EU's Fifth Anti-Money Laundering Directive (the "Fifth AML Directive") was submitted to the Parliament on 4 October 2018. The proposal includes, inter alia, amendments to the Anti-Money Laundering Act (the "AML Act") and enactment of two new acts. The objective is that the proposed legislation would enter into force on 1 January 2019. Only approximately one year after the AML Act entered into force in Finland, it will be amended due to the latest amendments to European anti-money laundering legislation. The amendments form part of the EU Commission's action plan on strengthening the fight against terrorist financing and must be implemented by the Member States by 10 January 2020. Our observations of the proposed key amendments to the current legislation are set out below. In summary, the Fifth AML Directive significantly limits anonymity in the financial sector and tackles money laundering and terrorist financing in new ways. Continuous compliance efforts are therefore needed from both current and new reporting entities under the AML Act. Key Observations 1. Extension of the Scope of the AML Act to Crypto Market Crypto currencies or virtual currencies are currently not explicitly regulated by Finnish law and they are not considered to be payment instruments under the payment service legislation. The proposed amendments will both define virtual currencies for the first time under Finnish law and also set specific requirements for those providing services related them. The scope of the AML Act would be extended to cover custodian wallet providers and providers engaged in exchange services between virtual currencies and fiat currencies. This means that, in the future, all crypto exchanges and all providers of electronic wallets for virtual currencies such as bitcoin would be covered by the AML Act. These platforms and providers would be required to register with the Finnish Financial Supervisory Authority and they would have to meet the requirements of the AML Act including the same responsibilities as other reporting entities, such as monitoring transactions and implementing customer due diligence. Additionally, a new Act on the Providers of Virtual Currencies (FI: Laki virtuaalivaluuttojen tarjoajista) is being proposed. The scope of the Act would cover also issuers of virtual currencies, although in many occasions the identity of such is not known. The scope of the AML Act would further be extended to cover e.g. art dealers (with respect to transactions where the value amounts to 10,000 euros or more) and all forms of tax advisory services. 2. Beneficial Ownership Information Registers of beneficial ownership information required under the current AML Act will come into effect as planned. Accordingly, all legal persons, excluding listed companies, are required to keep information on their beneficial owners as of 1 January 2019 and enter beneficial owners to the registers maintained by the Finnish Patent and Registration Office by 1 July 2020. In addition, reporting entities and competent authorities would have to notify the holder of the registers of discrepancies found between the beneficial ownership information on the registers and the beneficial ownership information they hold otherwise. Furthermore, beneficial owners would have an obligation to provide the respective companies with their beneficial ownership information required for the registers. 3. Politically Exposed Persons Politically exposed persons (PEPs) continue to be high risk for the purposes of the Know Your Customer (KYC) procedures and require enhanced due diligence. In order to enable reporting entities to better identify PEPs, offices and functions that qualify as politically exposed on national level including also nationally registered international organizations would be specified in a separate Government Decree. 4. High-Risk Third Countries According to the proposed amendments to the AML Act, reporting entities would be required to implement enhanced due diligence measures to monitor suspicious transactions involving high-risk countries more strictly. This includes, inter alia, obtaining information on details regarding the nature of the relationship, the origin of the transferred funds and the business partner’s motivation to liaise. Additionally, the reporting entity’s higher management would be required to give consent to the business relationship. Also existing business relationships would be strictly monitored. According to the proposal, the Finnish Financial Supervisory Authority would be given further authority in the subject matter, after which it may for example refuse reporting entities from high-risk third countries to establish themselves in Finland or prevent reporting entities from Finland to establish themselves in high-risk third countries. 5. Monitoring of Bank and Payment Accounts According to the Fifth AML Directive, Member States shall establish centralized automated mechanisms, such as central national registries or central electronic data retrieval systems, for bank and payment accounts to ensure the quick identification of all accounts of any individual by the financial intelligence units and competent authorities. In Finland, a new Act on the Bank and Payment Accounts Monitoring System (Fi: Laki pankki- ja maksutilien valvontajärjestelmästä) is being proposed to enable direct access to relevant account information by competent authorities. The centralized monitoring system would include both automated interfaces for information searches and a register maintained by the Finnish Customs. Credit institutions and their Finnish branches must establish an electronic data retrieval system that enables providing the information to the competent authorities without delay. Payment institutions, electronic money issuers, custodian wallet providers, providers engaged in exchange services between virtual currencies and fiat currencies and issuers of virtual currencies as well as their Finnish branches must provide information to the bank and payment accounts register. 6. Electronic Money Products Under the current AML Act, reporting entities may apply simplified due diligence measures with respect to e-money which meets certain conditions, including threshold amounts. The threshold for identifying holders of non-rechargeable prepaid cards would now be lowered from EUR 250 to EUR 150 per month. E-money online transactions with prepaid cards would be limited to EUR 50. 7. Going Forward As a main rule, the proposed amendments are intended to enter into force on 1 January 2019. The Government’s proposal (HE 167/2018 vp) is available here (only in Finnish). Developments on the European Union stage continue: the lawmaking procedure concerning proposal for a directive which would facilitate the use of financial and other information for the prevention, detection, investigation or prosecution of money laundering, associate predicate offences and terrorist financing is under way. Also further regulations relating to anti-money laundering are projected in the future. We are happy to discuss the implications of the proposed legislation as well as keep you updated on the legislative process. For more information and guidance, please contact the Head of our Corporate Advisory, Compliance & CSR practice group, Hanna-Mari Manninen.
Law and Responsible Business
19 Sep 2018 We enter into cooperation with Finnish Business & Society ry (FIBS) to help to build better businesses and sustainable solutions. As of the beginning of 2019, FIBS is launching a programme producing corporate responsibility training and events in collaboration with selected expert organisations specialising in different responsibility themes within the framework of the new FIBS Partner programme. As a part of the FIBS Partner programme, we offer training for FIBS members aiming to provide practical information for monitoring legal developments relating to corporate responsibility. Corporate responsibility is an integral part of the insightful legal advice we provide to our clients. Corporate responsibility and sustainable business models will be our key themes during our 120th anniversary year 2019. "This is an exciting opportunity, fully aligned with our strategy and values. Corporate responsibility is a strategic question for all – and a legal perspective is necessary in finding practical and valuable solutions that make a real difference in building responsible business", says Partner Hanna-Mari Manninen. "We look forward to co-operation with our new partners, who are all top experts in their fields. We are pleased to have Dittmar & Indrenius on board as our partner who brings in the legal insights to corporate responsibility. Co-operation with our partners is an important opportunity for us to accelerate the growth of sustainable business in Finland", says Helena Kekki, Manager of FIBS's membership services. "Co-operation with FIBS signals our will to meet the future challenges of our clients in the constantly evolving business environment. D&I's Powerhouse model providing the clients with comprehensive, sustainable solutions for their business needs will play an instrumental role when providing services within the FIBS Partner programme", says Partner Kari Lautjärvi. Further information: Hanna-Mari Manninen, Partner, Head of Corporate Advisory, Compliance & CSR, tel. +358 40 717 7494, [email protected] Kari Lautjärvi, Partner, tel. +358 9 6817 0102, [email protected] Katja Hollmén, Director of Client Relations, tel. +358 50 573 7396, [email protected]   Dittmar & Indrenius, established in 1899, is a leading Finnish law firm focused on creating exceptional added value to demanding corporate clients. FIBS helps companies to do better business. It offers information about new, innovative ways of developing responsible business and a unique opportunity to network with companies from different fields as well as other social actors. The FIBS network includes over 320 companies and organisations.

Share this

Dittmar & Indrenius