Financial Action Task Force Groupe d'action financière THIRD MUTUAL EVALUATION REPORT ANTI-MONEY LAUNDERING AND COMBATING THE FINANCING OF TERRORISM FINLAND 12 October 2007 TABLE OF CONTENTS PREFACE ........................................................................................................................................................... 4 EXECUTIVE SUMMARY ...................................................................................................................................... 5 1. GENERAL ............................................................................................................................................. 11 1.1 GENERAL INFORMATION ON FINLAND ......................................................................................................... 11 1.2 GENERAL SITUATION OF MONEY LAUNDERING AND FINANCING OF TERRORISM ...................................................... 13 1.3 OVERVIEW OF THE FINANCIAL SECTOR AND DNFBPS ..................................................................................... 18 1.4 OVERVIEW OF COMMERCIAL LAWS AND MECHANISMS GOVERNING LEGAL PERSONS AND ARRANGEMENTS .................. 27 1.5 OVERVIEW OF STRATEGY TO PREVENT ML AND TF ......................................................................................... 30 2. LEGAL SYSTEM AND RELATED INSTITUTIONAL MEASURES ................................................................... 36 2.1 CRIMINALISATION OF MONEY LAUNDERING (R.1 & 2) .................................................................................... 36 2.2 CRIMINALISATION OF TERRORIST FINANCING (SR.II) ....................................................................................... 43 2.3 CONFISCATION, FREEZING AND SEIZING OF PROCEEDS OF CRIME (R.3) ................................................................ 46 2.4 FREEZING OF FUNDS USED FOR TF (SR.III) ................................................................................................... 52 2.5 THE FINANCIAL INTELLIGENCE UNIT AND ITS FUNCTIONS (R.26) ....................................................................... 57 2.6 LAW ENFORCEMENT, PROSECUTION AND OTHER COMPETENT AUTHORITIES – THE FRAMEWORK FOR INVESTIGATION AND PROSECUTION OF OFFENCES AND FOR CONFISCATION AND FREEZING (R.27 & 28) ................................................ 68 2.7 CROSS BORDER DECLARATION OR DISCLOSURE (SR.IX) .................................................................................... 82 3. PREVENTIVE MEASURES ‐ FINANCIAL INSTITUTIONS ............................................................................ 86 3.1 RISK OF MONEY LAUNDERING OR TERRORIST FINANCING .................................................................................. 87 3.2 CUSTOMER DUE DILIGENCE, INCLUDING ENHANCED OR REDUCED MEASURES (R.5 TO 8) ......................................... 88 3.3 THIRD PARTIES AND INTRODUCED BUSINESS (R.9) .......................................................................................... 98 3.4 FINANCIAL INSTITUTION SECRECY OR CONFIDENTIALITY (R.4) .......................................................................... 100 3.5 RECORD KEEPING AND WIRE TRANSFER RULES (R.10 & SR.VII) ...................................................................... 102 3.6 MONITORING OF TRANSACTIONS AND RELATIONSHIPS (R.11 & 21) ................................................................ 107 3.7 SUSPICIOUS TRANSACTION REPORTS AND OTHER REPORTING (R.13‐14, 19, 25 & SR.IV) .................................... 110 3.8 INTERNAL CONTROLS, COMPLIANCE, AUDIT AND FOREIGN BRANCHES (R.15 & 22).............................................. 115 3.9 SHELL BANKS (R.18) ............................................................................................................................. 118 3.10 THE SUPERVISORY AND OVERSIGHT SYSTEM ‐ COMPETENT AUTHORITIES AND SROS. ROLE, FUNCTIONS, DUTIES AND POWERS (INCLUDING SANCTIONS) (R.23, 29, 17 & 25) ............................................................................... 119 3.11 MONEY OR VALUE TRANSFER SERVICES (SR.VI) ........................................................................................... 139 4. PREVENTIVE MEASURES – DESIGNATED NON‐FINANCIAL BUSINESSES AND PROFESSIONS ................. 141 4.1 CUSTOMER DUE DILIGENCE AND RECORD‐KEEPING (R.12) ............................................................................. 141 4.2 SUSPICIOUS TRANSACTION REPORTING (R.16) ............................................................................................ 145 4.3 REGULATION, SUPERVISION AND MONITORING (R.24‐25) ............................................................................. 148 4.4 OTHER NON‐FINANCIAL BUSINESSES AND PROFESSIONS ‐ MODERN SECURE TRANSACTION TECHNIQUES (R.20) ......... 153 5. LEGAL PERSONS AND ARRANGEMENTS & NON‐PROFIT ORGANISATIONS ........................................... 154 5.1 LEGAL PERSONS – ACCESS TO BENEFICIAL OWNERSHIP AND CONTROL INFORMATION (R.33) ................................. 154 5.2 LEGAL ARRANGEMENTS – ACCESS TO BENEFICIAL OWNERSHIP AND CONTROL INFORMATION (R.34) ........................ 158 5.3 NON‐PROFIT ORGANISATIONS (SR.VIII) .................................................................................................... 159 6. NATIONAL AND INTERNATIONAL CO‐OPERATION .............................................................................. 163 6.1 NATIONAL CO‐OPERATION AND CO‐ORDINATION (R.31) ............................................................................... 163 6.2 THE CONVENTIONS AND UN SPECIAL RESOLUTIONS (R.35 & SR.I) ................................................................. 165 6.3 MUTUAL LEGAL ASSISTANCE (R.36‐38, SR.V) ........................................................................................... 168 6.4 EXTRADITION (R.37, 39, SR.V) .............................................................................................................. 174 6.5 OTHER FORMS OF INTERNATIONAL CO‐OPERATION (R.40 & SR.V) ................................................................. 177 7. OTHER ISSUES ................................................................................................................................... 185 7.1 RESOURCES AND STATISTICS (R.30 & R.32) ............................................................................................... 185 7.2 OTHER RELEVANT AML/CFT MEASURES OR ISSUES ..................................................................................... 185 2 7.3 GENERAL FRAMEWORK FOR AML/CFT SYSTEM (SEE ALSO SECTION 1.1) .......................................................... 185 TABLES ...................................................................................................................................................... 186 TABLE 1: RATINGS OF COMPLIANCE WITH FATF RECOMMENDATIONS .......................................................................... 186 TABLE 2: RECOMMENDED ACTION PLAN TO IMPROVE THE AML/CFT SYSTEM ............................................................... 195 TABLE 3: AUTHORITIES’ RESPONSE TO THE EVALUATION ............................................................................................ 205 ANNEXES ................................................................................................................................................... 206 ANNEX 1: ABBREVIATIONS ................................................................................................................................ 207 ANNEX 2: ALL BODIES MET DURING THE ON‐SITE VISIT ........................................................................................... 208 ANNEX 3: PROVISIONS OF KEY LAWS, REGULATIONS AND OTHER MEASURES ............................................................... 209 ANNEX 4: ALL LAWS, REGULATIONS AND OTHER MATERIAL RECEIVED ........................................................................ 244 ANNEX 5: ADDITIONAL CHARTS AND TABLES ......................................................................................................... 245 3 PREFACE Information and Methodology Used for the Evaluation of Finland 1. The evaluation of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Finland1 was based on the Forty Recommendations 2003 and the Nine Special Recommendations on TF 2001 of the Financial Action Task Force (FATF), and was prepared using the AML/CFT Methodology 20042. The evaluation was based on the laws, regulations and other materials supplied by Finland, and information obtained by the evaluation team during its on-site visit to Finland from 16 to 27 April 2007 inclusive, and subsequently. During the on-site visit the evaluation team met with officials and representatives of all relevant Finnish government agencies and the private sector. A list of the bodies met is set out in Annex 2 to this mutual evaluation report. 2. The evaluation was conducted by an assessment team, which consisted of members of the FATF Secretariat and FATF experts in criminal law, law enforcement and regulatory issues: Mr. Vincent Schmoll and Ms. Rachelle Boyle of the FATF Secretariat; Mr. Kent Madstedt, National Economic Crimes Bureau, Sweden, legal expert; Ms. Lia Umans, CTIF-CFI, Belgium, law enforcement expert; Ms. Raquel Cabeza Pérez, Ministry of Economy and Finance, Spain, financial expert; and Mr. Joshua Kaptur, Financial Crimes Enforcement Network, USA, financial expert. The experts reviewed the institutional framework, the relevant