Preventing money laundering and terrorist financing
Money laundering refers to activities in which funds of criminal or illegal origin are recycled through a legal payment system to cover the actual nature, origin or owners of the funds. Terrorist financing means the acquisition or collection of funds of legal or illegal origin for terrorist purposes.
Legislation to prevent money laundering and terrorist financing
In the European Union, the prevention of the use of the financial system for the purposes of money laundering and terrorist financing is regulated under the Anti-Money Laundering Directive. The so-called fourth Anti-Money Laundering Directive is from 2015, and it was amended by the fifth Anti-Money Laundering Directive in 2018. In addition, the EU Funds Transfer Regulation contains provisions on the prevention of money laundering.
In Finland, the Act on Preventing Money Laundering and Terrorist Financing (444/2017, Anti-Money Laundering Act) lays down provisions on the prevention of money laundering and terrorist financing, promotes the detection and investigation of money laundering and terrorist financing, and reinforces the tracing and recovery of the proceeds of crime. The national legislation is based on the Anti-Money Laundering Directives and the most recent recommendations of the Financial Action Task Force FATF (see below for more information on FATF).
(Click to enlarge)
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, for the decrees issued under it, and for the preparation of the national money laundering risk assessment. The Ministry of Finance is also responsible for the national coordination of matters related to the FATF.
The Ministry of the Interior is responsible for the Act on the Financial Intelligence Unit (445/2017) 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 supervision of compliance with the UN and EU financial sanctions in Finland.
Financial Intelligence Unit of the National Bureau of Investigation
The Financial Intelligence Unit operates in connection with the National Bureau of Investigation. The Financial Intelligence Unit is tasked with preventing, detecting and investigating cases of money laundering and terrorist financing, with receiving and analysing suspicious transaction reports, and with cooperating with the other key actors in preventing money laundering and terrorist financing. The Financial Intelligence Unit makes the decisions to freeze funds under the Act on the Freezing of Funds with a View to Combating Terrorism. The purpose of freezing decisions is to prevent the person, group or entity subject to the decision from channelling the funds in its possession for terrorist purposes.
The authorities supervising the obliged entities in accordance with the Anti-Money Laundering Act are the Financial Supervisory Authority in respect of obliged entities in the financial sector, the National Police Board in respect of gambling operators in mainland Finland, the Finnish Patent and Registration Office in respect of auditors, and the Regional State Administrative Agency for Southern Finland in respect of other obliged entities. The authorities of Åland are responsible for supervising the gambling operators and real estate agencies in Åland. In addition, the Finnish Bar Association supervises attorneys-at-law.
Finnish Security and Intelligence Service
The duty of the Finnish Security and Intelligence Service is to prevent and combat the most serious threats to national security, including terrorism.
Finnish Patent and Registration Office
The Finnish Patent and Registration Office maintains a register of beneficial owners.
Financial Action Task Force (FATF)
The Financial Action Task Force (FATF) is an inter-governmental body operating under the Organisation for Economic Co-operation and Development OECD with the objective of combating money laundering, terrorist financing, and financing of proliferation of weapons of mass destruction. The group develops and issues recommendations and follows their implementation in the member states with annual inquiries and periodic country evaluations.
Finland has been a member of the FATF since 1991. The 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 countries of the FATF are politically committed to implement. The recommendations were last revised completely in 2012 and individual specifications have been made to them even after that.
The most recent Mutual Evaluation of Finland was completed in spring 2019 (the report was published on 16 April 2019). The first follow-up report for the Mutual Evaluation of Finland will be discussed by the FATF in October 2020.
The FATF Plenary meets three times a year.
The most recent FATF Plenary and Working Group Meetings took place in Paris in February under the Chinese Presidency. A summary of the issues discussed and decided by the Plenary is available on the FATF website. The Plenary also decided to revise the communication related to the countries subject to different measures. In future, the FATF will use the following names for its lists of countries:
- Jurisdictions under Increased Monitoring: The FATF does not call for the application of enhanced due diligence to be applied to these jurisdictions, but encourages its members to take into account the observations made by the FATF in their risk analysis.
- High-Risk Jurisdictions subject to a Call for Action (previously called ‘Public Statement’): For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the country.
The updated information and criteria for the listings are available on the FATF website under Jurisdictions under Increased Monitoring and High-Risk Jurisdictions subject to a Call for Action.
Specifically for private sector, the FATF regularly produces a brief update, FATF Business Bulletin, that highlights the FATF’s decisions and new products that are particularly relevant to them
EU cooperation in 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). On 4 December 2018, the ECOFIN Council adopted an Anti-Money Laundering Action Plan (see the Action Plan on the Commission's website). One of the objectives of Finland's Presidency of the Council of the European Union was that the ECOFIN Council would adopt conclusions on the strategic objectives of the money laundering legislation in its meeting of 5 December 2019.
The Ministry of Finance participates in the meetings of the EU’s Financial Services Committee and Economic and Financial Committee, which also deal with issues related to the prevention of money laundering and terrorist financing. The Committees also prepare matters to be dealt with by the ECOFIN Council.
The Ministry of Finance and the Ministry of the Interior take part in the European Commission's Expert Group on Money Laundering and Terrorist Financing, which convenes several times a year. The Expert Group discusses topical questions related to money laundering and terrorist financing both in Europe and globally, such as implementation of legislation, market occurrences, and international cooperation.
Bank and payment accounts control system
The Act on the Bank and Payment Accounts Control System (571/2019), which entered into force in 2019, aims to facilitate the combating of money laundering and terrorist financing. In accordance with the Act, Customs will establish a bank and payment accounts register and issue a regulation on a data retrieval system.
The bank and payment accounts control system consists of two components: the bank and payment accounts register (Account Register) and data retrieval systems. The obliged entities are credit institutions, payment institutions, electronic money institutions and virtual currency providers. The obliged entities will provide their information either through an interface provided in the data retrieval system they have built or by transmitting the information to the Account Register. Customs will implement the Account Register and build an interface through which the financial operators can enter information in the Account Register. In addition, Customs has built an interface enabling the information systems of the competent authorities and associations of lawyers to make queries in the Account Register. The information systems of the competent authorities and associations of lawyers can make queries directly in the data retrieval systems of the obliged entities.
Contact person for the website: Maarit Pihkala, Jaana Vehmaskoski
Sanctions in the financial markets
In Finland, the system of sanctions in the financial markets is largely based on EU legislation. Member States are obliged to issue provisions on the administrative sanctions that can be imposed in the event of a breach of either the directly applicable provisions of EU regulations or the national provisions transposing EU directives.
Member States may, if they so wish, issue provisions on criminal sanctions instead of administrative sanctions. As a rule, Member States may use their discretion in deciding whether they want to lay down provisions on liability for damages.
In Finland, the system of sanctions in the financial markets is based on the broad scope of application of the administrative sanctions in accordance with EU legislation. The possible administrative sanctions are an administrative fine, a public warning and a penalty payment. A penalty payment may amount to at most 15% of the group's turnover for legal persons and to EUR 5 million for natural persons.
Administrative sanctions are imposed by the Financial Supervisory Authority. A decision of the Financial Supervisory Authority to impose a sanction may be appealed against to the Helsinki Administrative Court.
Some of the most serious acts and neglects have also been criminalised either in the legislation governing the financial markets or in the Criminal Code. For example, chapter 51 of the Criminal Code contains provisions on the abuse of insider information, market price distortion, and security market information offence. Several statutes governing the financial markets also contain provisions on liability for damages.
Contact person for the website: Janne Häyrynen
Act on Preventing Money Laundering and Terrorist Financing (new version not yet in Finlex)
Financial Intelligence Unit (National Bureau of Investigation)