A key element of the Anti Money Laundering Act (2017/444) is its risk-based nature. In practice, this means that those required by law to report must identify their own risks of money laundering and terrorist financing and scale the measures to prevent them in a proportionate manner.
The notifier’s risk assessment includes potential business threats and measures designed to minimize the risk of money laundering.
The risk assessment must describe the nature, size and extent of the activities of the notifier. Based on these factors, adequate policies need to be established to know, identify, and store information for the customer. The assessment must also include a stance on internal control and reporting. Larger reporting agents will also need to consider internal audit or other similar practices to test policies and procedures.
The risk assessment is primarily intended for the notifier’s own use and does not need to be submitted to the supervisory authority, at least at this stage. However, the estimate must be in the notifier’s “desk drawer” and updated from the beginning of 2018. The notifier shall provide an updated risk assessment to the supervisory authority upon request. The management of the company must approve the risk assessment of the notifier.
The Act on Detecting and Preventing Money Laundering and Terrorist Financing defines exactly who is required to report by law. To date, the most active in their measures have been those notifiers whose licensing is decided by the Financial Supervision Authority. However, the law applies to the following actors: Accountants, Law Firms, Lawyers, Accountants and Real Estate Agents. The latest amendment to the law this year further clarifies the inclusion of tax advisers and art dealers as notifiers. All these actors are required to take measures in the economy to reduce the risk of money laundering and terrorist financing.
There is a supervisory authority for each notifier, whose task is to issue instructions and monitor compliance with the law. Lawyers are supervised by the Bar Association, auditors are supervised by the PRH and the activities of the financial sector are supervised by the Financial Supervisory Authority. Those that do not belong to the above are supervised by the Southern Finland Regional State Administrative Agency. It is still unclear to many notifiers at this stage whether or not a company is a notifier. This is ensured by the register of notifiers to be opened by the Regional State Administrative Agency of Southern Finland on 1 July 2019, to which joining is mandatory if the criteria for the notification obligation are met. See the link who police defines as a notifier: poliisi.fi/en/money-laundering
Beneficial Owner – A beneficial owner must be identified for each company or entity. A person is a beneficial owner if he or she directly or indirectly owns more than 25% of the company. A person is also a beneficial owner if he or she otherwise exercises de facto power in the company.
If the company does not have a beneficial owner based on ownership or voting rights, then the beneficiary is the board of directors or an equivalent institution or the company’s CEO.
More information on the actual beneficiaries can be found on the Finnish Patent and Registration Office’s website.
AML – Anti-money laundering
KYC – Know Your Customer
Knowing the customer – A comprehensive understanding of how an individual or company operates
Customer Authentication – The customer’s identity is verified from a trusted source
Customer Identification – Identifies the identity of the customer’s representative or beneficiary
Supervision of the Money Laundering Act: Enforcement of the Anti-Money Laundering Act
Money laundering: poliisi.fi/en/money-laundering
Prevention of money laundering: www.finanssivalvonta.fi/en/prevention-of-money-laundering-and-terrorist-financing