Legal updates covering current topics.
We understand that it may be difficult to stay up-to-date with the boundless financial news flow. We have therefore compiled an update on the season’s key highlights and regulative changes in the financial sector, which we hope will help you stay on track.
Below you will find key highlights on a more general level and down below more detailed highlights concerning different types of licensed companies operating in the financial sector.
Anti-Money Laundering & KYC
- National risk assessment on money laundering and terrorist financing
The new Finnish national risk assessment on money laundering and terrorist financing was published by the Ministry of Finance in April 2021. The document describes the threats, vulnerabilities and risks arising from money laundering and terrorist financing in all sectors of obliged entities and in the activities of non-profit organisations.
Read in full (Finnish only): Kansallinen rahanpesun ja terrorismin rahoittamisen riskiarvio 2021 (valtioneuvosto.fi)
- EBA highlights key money laundering and terrorist financing risks across the EU
The European Banking Authority (EBA) has published a biennial Opinion on risks of money laundering and terrorist financing (ML/TF) affecting the European Union’s financial sector. The ML/TF risks identified by the EBA include those that are applicable to the entire financial system, for instance the use of innovative financial services, while others affect specific sectors, such as de-risking.
Read EBA’s Opinion in full: Opinion on MLTF risks.pdf (europa.eu)
- Judgement by the Supreme Court on money laundering by negligence
Ålands Penningautomatförening (Paf), a gambling association, was convicted of negligent money laundering by the Finnish Supreme Court (HD 2021:6). In January 2012, Paf reported a suspicious transaction to the Finnish Financial Intelligence Unit (FIU) regarding a customer whose playing behaviour had caused a money laundering suspicion. After this, the customer had been allowed to continue gambling with Paf’s products until October 2012, with some EUR 580 000. According to the Supreme Court, Paf had not exercised due care and attention for the prevention of crime and, therefore, the Supreme Court imposed a corporate fine of EUR 250,000 on Paf for negligent money laundering.
Read the judgement in full (Swedish only) here.
ESG and Sustainable Finance
- EU Taxonomy Delegated Act
The first Delegated Act defines the technical screening criteria for economic activities that can make a substantial contribution to climate change mitigation and climate change adaptation. The criteria cover the economic activities of roughly 40% of EU-domiciled listed companies, in sectors which are responsible for almost 80% of direct greenhouse gas emissions in Europe.
The Taxonomy (EU) 2020/852 will help create the world’s first-ever “green list” – a classification system for environmentally sustainable economic activities. The Regulation tasked the Commission with establishing technical screening criteria through Delegated Acts. The College of Commissioners reached a political agreement on the text of the first Delegated Act on 21 April 2021.
Read more about the sustainable finance package published in April: Sustainable finance package | European Commission (europa.eu)
News by company sector
Funds and fund management companies
- FIN-FSA’s and ESMA’s results of the 2020 assessment of UCITS liquidity risk management
The FIN-FSA conducted two assessments of UCITS liquidity risk management (LRM) in 2020. The assessments were a part of the European Securities and Markets Authority’s (ESMA) Common Supervisory Action. Both the FIN-FSA and ESMA have now published their results of the LMR assessments.
Read FIN-FSA’s results here: Sijoitusrahastojen likviditeetinhallinnassa vielä kehitettävää – 2021 – www.finanssivalvonta.fi
Read ESMA’s results here: ESMA assesses the compliance with UCITS liquidity rules and highlights areas for vigilance (europa.eu)
- ESMA’s report on costs of retail investment products
ESMA has published a report on the costs and performance of retail investment products. In the report ESMA states that the costs of retail investment products, such as UCITS funds, AIFs and structured investment products, remain high and undermine investors’ ultimate returns. ESMA attaches particular importance to providing clear and comprehensible information on the impact of costs on revenue, so that investors can make informed investment decisions.
Read ESMA’s report in full: esma_50-165-1710_asr_performance_and_costs_of_eu_retail_investment_products.pdf (europa.eu)
- Draft government proposal regarding the national implementation of the directive on cross-border distribution of funds
A draft government proposal has been published regarding the national implementation of the regulation on cross-border distribution of funds (EU) 2019/1156. The proposal is open for public consultation until 17 June 2021.
Read the proposal in full here (Finnish only): Lausunto – Lausuntopalvelu
- IFR and IFD will become applicable on 26th June 2021
The Investment Firm Regulation (IFR) and the Investment Firm Directive (IFD) will cause significant changes to investment firms’ prudential framework. The IFR becomes directly applicable on 26th June 2021. Furthermore, Member States are required to implement the IFD before 26th June 2021 to national legislation. The government proposal implementing the IFD into the Finnish Act on Investment Services was approved by the parliament in April, but still awaits approval from the president.
The IFR: EUR-Lex – 32019R2033 – EN – EUR-Lex (europa.eu)
The IFD: EUR-Lex – 32019L2034 – EN – EUR-Lex (europa.eu)
The amended Act (Finnish and Swedish only): EV 41/2021 vp (eduskunta.fi)
- EIOPA launches its IDD single rulebook
European Insurance and Occupational Pensions Authority (EIOPA) has published the IDD Single Rulebook. The Single Rulebook is an online tool that promote the consistent implementation of the regulatory framework for insurance supervision.
The main benefit of the Single Rulebook is that it enables the navigation across different legal acts such as the IDD, Delegated and Implementing Regulations, as well as EIOPA Guidelines and IDD questions and answers submitted via EIOPA’s dedicated Q&A process.
The Single Rulebook: IDD Single Rulebook | Eiopa (europa.eu)
- The European Commission has provided new questions and answers on the IDD
The European Commission has provided answers to a series of questions regarding the legal interpretation of provisions of the IDD and its implementing measures.
Read the questions and answers here: Questions & Answers on the Insurance Distribution Directive | Eiopa (europa.eu)
- Initial proposal for the establishment of a positive credit information register published by the Ministry of Justice
The working group of the Ministry of Justice has published a memorandum concerning the establishment of a positive credit information register. The memorandum includes an initial proposal for the enactment of a new act on the positive credit information register. The proposed legislation is planned to enter into force in 2022, but the register would be introduced in 2024.
Read the memorandum in full (Finnish only): Positiivista luottotietorekisteriä koskeva lainsäädäntö. Työryhmän mietintö (valtioneuvosto.fi)
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