The Scope of the Money Laundering Act Widens – New Duties to the Persons with Beneficial Ownership of Assets
December 19, 2018
A government proposal (HE 167/2018) was given to the parliament the 4th of October and the intention is that the new Act will come into effect 1.1.2019. The proposal relates to preventing white-collar crimes and the black economy and the aim is to implement the fifth Money Laundering Directive and complement and clarify especially the Money Laundering Act with national changes, which are considered to be necessary after the implementation of the forth Money Laundering Directive. The purpose of the legislative project is also to increase the effectiveness of the electronic environment used by the authorities and improve the possibility for nationals and corporations to send information electronically to the authorities.
The scope of the Act will widen due to the fifth Money Laundering Directive so that the Act will apply to foreign corporations which are equivalent to the national ones which licences are supervised, if the foreign corporation offers services in Finland without establishing a branch through an agent. The scope will also widen to apply, in addition to tax advisors, to persons, who offer, as their main professional activity, direct or indirect support or guidance relating to taxation.
Providers engaged in exchange services between virtual currencies and fiat currencies, persons trading or acting as intermediaries in the trade of works of art, including when it is carried out by free ports, where the value of the transaction or a series of linked transactions amounts to 10 000 euros or more will be added to the persons with a duty to report.
The public functions that are considered as politically exposed will be regulated with a Government Decree. To maintain a list like that in an Act would not be reasonable because of its details and need for updates. The Decree would cover the national politically exposed functions as well as politically exposed functions of international organisations. There would be no changes to the definition of a politically exposed function.
There will be additions to the information from customer due diligence which should be held, for example bank and payment accounts, the owner or the user of the account, opening and closing dates of the account and other identity information related to the account. The customer due diligence is also clarified relating to the derogation considering electronic money. The maximum amount of money which can be saved in an electronic data storage medium will be lowered from 250 euros and 500 euros to 150 euros. The possibility to withdraw cash from an electronic data storage medium will be lowered from 100 euros to 50 euros. The regulation relating to customer due diligence is also clarified concerning the enhanced customer due diligence measures to be taken with regard to high-risk third countries.
The customer due diligence measures should be followed according to the risk-based approach through the entire customer relationship. The supervised should have sufficient measures for the risk management of preventing money laundering and terrorist financing considering the character and extent of the business. According to the risk-based approach corporations must, for example, apply all efficient customer due diligence measures, use the necessary business reporting methods and limit customer relationships and business with customers from high-risk third countries identified by the European Commission.
The regulation concerning beneficial owners of trusts and corporations will be changed so that a beneficial owner of the corporation is required to provide the corporation with information that should be registered. The one with a duty to report and the supervisory authority would get a duty to report any flaws or inconsistencies that they notice as soon as possible to the register.
Olli Kiuru, Partner, tel: +358 40 7168 020, email@example.com