Money laundering represents the legalization of funds from criminal or illegal sources through a legitimate payment system. Terrorist financing represents the funding of terrorists to carry out terrorist activities. Therefore, financial crimes pose significant threats to the whole world as well as to Finland. As a hub of innovation, Finland assures its people and investors with numerous safety measures against fraud.
The History of AML in Finland
Finland has been a member of the Financial Action Task Force (FATF) since 1991. Thanks to its resolve in Anti-Money Laundering measures, Finland has been deemed compliant on 9 Recommendations and largely compliant on 24 Recommendations for the 40 FATF Recommendations as of 2022. This compliance puts Finland out of FATF’s list of AML-deficient countries.
Since Finland is not in the spotlight for financial crime in its region, the measures against money laundering and terrorist financing have stayed low until 2008. In the said year, the Act on Detecting and Preventing Money Laundering and Terrorist Financing was enacted to lay down the necessities in the AML compliance procedures. It was later amended several times to prove a more efficient framework.
As an effective member of the FATF and the European Union (EU), Finland has collaborated with these organizations to provide comprehensive and international outlines for AML compliance. The Fourth EU Anti-Money Laundering Directive proved vital to Finland in order to make its AML compliance measures more effective. The importance of international collaboration was proven once again when The Fifth EU Anti-Money Laundering Directive was published. Finland continuously develops new measures to ensure that its compliance measures stay up to date.
The Financial Regulator of Finland
Since its establishment in 2009, the Financial Supervisory Authority (FIN-FSA) has acted as the financial regulator of Finland. As an independent authority under the Ministry of Finance, FIN-FSA aims to ensure the stability and integrity of the Finnish financial markets and to safeguard the interests of consumers and investors.
The autonomous region of Åland uses its direct authority to supervise the financial framework inside its own vicinity. As such, collaboration with FIN-FSA remains vital for either authority.
The Fight Against Money Laundering in Finland
Finland has made clear in its Act on Preventing Money Laundering and Terrorist Financing that money laundering and terrorist financing are crimes that must be stopped to influence the Finnish financial environment. This act states which activities will be criminalized and the penalties for money laundering activities.
Finland's national AML acts and regulations are mostly based on the EU directives and the FATF recommendations. To provide the needful authority, the National Bureau of Investigation (NBI) operates as the Financial Intelligence Unit of Finland. The National Bureau of Investigation is responsible for detecting and preventing financial crimes in league with the judicial measures of the Finnish government.
Importance of KYC in AML Compliance
Know Your Customer (KYC) and Customer Due Diligence (CDD) obligations have a large place among AML obligations in Finland. According to the KYV procedures, customer information must be collected before companies start a business relationship with a customer, and the accuracy of this information must be checked. Then, the company must apply a risk assessment to the customer with the CDD procedures. During the risk assessment, sanction list screening, politically exposed persons (PEPs) screening, and adverse media screening must be performed. Companies aim to detect potential risks during the opening of a customer account with these controls.
Financial Crime Penalties in Finland
According to the NIU’s Financial Intelligence Unit, money laundering offenses may be punished in two different ways. The first one is a monetary fine, depending on the impact of the financial crime. If the crime proves aggravated, the penalty turns into the form of imprisonment, which will be from four years up to six years.
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