Finnish Bank and Payment Accounts Monitoring System - New Reporting Obligations for Finnish and Foreign Financial Institutions

Authors: Pauliina Sutinen and Jari Tukiainen

The Act on Bank and Payment Accounts Monitoring System (571/2019, the “Account Monitoring Act” or the “Act”) (in Finnish: laki pankki- ja maksutilien valvontajärjestelmästä) has introduced new reporting obligations for Finnish financial institutions and foreign financial institutions operating in Finland by implementing the EU’s 5th Anti-Money Laundering Directive (the “5AMLD”). Depending on the legal status of the financial institution, such an institution needs to either maintain a bank and payment account data retrieval system or provide information for the Finnish Customs’ bank and payment accounts register.

The purpose of the Account Monitoring Act is to implement the 5AMLD and to thereby provide authorities with powers to retrieve information on the bank and payment accounts from market participants providing bank and payment accounts for their customers.

The Account Monitoring Act entered into force on 1 May 2019, but Sections 4 and 5 concerning credit institutions’ data retrieval system and the Finnish Customs’ bank and payment accounts monitoring system will apply as of 1 September 2020.

Obligations under the Bank and Payment Accounts Monitoring System

Under the Account Monitoring Act, the bank and payment accounts monitoring system is divided into two sections depending on the status of the entity providing accounts to their customers:

    1. Bank and Payment Account Data Retrieval System

• System must be maintained by credit institutions (or by foreign credit institutions’ Finnish branches)
• Credit institutions must provide information via the system to the competent authorities on their customers, customers’ bank and payment accounts, and safe deposit boxes held by the credit institution on behalf of the customer
• Possibility to apply for an exemption to the above-mentioned maintenance obligation

     2. Bank and Payment Accounts Register

• Register is operated by the Finnish Customs
• Payment institutions, electronic money institutions, and virtual currency providers (or the Finnish branches of such foreign entities) must provide information to the register
• Credit institutions may fall under this category if they obtain an exemption from the FIN-FSA on the maintenance obligation based on the size of the entity and the nature and scale of the activities

However, in certain circumstances, the Act may not necessarily apply to any of the above financial institutions. This is the case, for instance, where the relevant entity does not, despite of its status as a credit institution, de facto maintain bank or payment account for its customers. 

Sanctions

The FIN-FSA may impose sanctions, such as a conditional fine or penalty payment, for a breach of obligations under the Act. The amount of the penalty payment may vary from EUR 5,000 to EUR 100,000 for legal persons and from EUR 500 to EUR 10,0o0 for natural persons.

Hannes Snellman Assists in Financial Regulatory and Anti-Money Laundering Matters

The Account Monitoring Act is currently in the process of being amended in order to clarify certain discrepancies in the interpretation of its scope of application. The consultation process for stakeholders ended on 13 March 2020 and the government proposal for the amendments is expected to be presented to the Finnish Parliament at the end of April 2020.

Hannes Snellman is happy to assist in matters relating to the obligations relating to the bank and payment accounts monitoring system, anti-money laundering, and financial regulatory matters in general.