Money Laundering Act requires businesses to act – have you taken these steps?

Under the Money Laundering Act (rahanpesulaki), most businesses need to provide details of their beneficial owners – in practice, their owners – to the Trade Register by 1 July. Things like large cash sums paid by clients also need to be notified.

All limited liability companies and cooperatives are among the company types that have to file details of their beneficial owners. Sole traders and listed companies do not need to file. Housing companies, mutual real estate companies, foundations, religious communities and associations do not need to file either.

A beneficial owner of a company is someone who, for example, owns more than 25% of its shares, directly or via another company, or who otherwise has a controlling interest in the company.

Failing to file is an offence for which a company may receive a public warning or even a fine in certain circumstances. You can file the information online free of charge.

The beneficial owner notification form asks for the following details: name, personal ID or date of birth, citizenship, country and municipality of residence, and basis for and extent of controlling interest or ownership in the company.

An accountant or deputy can file information about beneficial owners for the company if the company has authorized them to do so.

Companies have until 1 July 2020 to file. After that, companies must file each time a new company is registered or when the beneficial owners’ details change. A company must also file when it has no beneficial owners or when the beneficial owners are not known to the company.

You can file and authorize a deputy electronically in the Business Information System service. Filing beneficial owners’ information and authorizing deputies is free of charge.

The obligation to file originates in the Money Laundering Act and EU directives, which require organizations such as banks to know their customers. Banks and other financial institutions must already gather and analyse information about companies’ ownership structures.

When companies’ beneficial owners’ details are registered, the work of banks will be easier and banking will be smoother, for example, when applying for a loan.

The rules on filing beneficial owner information apply in the entire EU. In many countries, companies had already been required to file information about their owners. In Finland, the new obligation to file beneficial owner information affects about 300,000 companies.

Read more about beneficial owners on the Finnish Patent and Registration Office (PRH) website.

Questions must be asked about unusual transactions

The Money Laundering Act places other obligations on business, too.

If, for some reason, a business’s suspicions are raised about its customer’s or partner’s transactions, it has to verify the customer’s identity and company information. Attention should also be paid to large cash sums. For example, does a customer usually pay their bills in cash?

The Money Laundering Act does not define any specific monetary amounts; instead, businesses must evaluate the situation as a whole. If a customer makes a cash payment of over €10,000, or if it is unusual for the customer to pay in cash in the first place, the business must ask the customer about the source of the money.

The business must also tell the customer why it is asking.

For every case in which a business suspects wrongdoing, it must file a notification with the Financial Intelligence Unit (FIU). A business must notify the FIU even if the transaction was declined or a business’s suspicions were only raised afterwards. The obligation to maintain confidentiality of customer data does not apply to suspicions of money laundering. Such suspicions must always be notified.

A company may engage in money laundering itself by helping or advising a customer in investments or establishing shell companies or asset transfers, even if it has no cause to suspect the customer’s transactions.

toimitus(at)yrittajat.fi