Legal Updates

Quarterly Financial Sector Newsletter

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

• The EBA Guidelines on money laundering and terrorist financing risk factors

EBA has published its final revised Guidelines on money laundering and terrorist financing risk factors. The Guidelines set out factors that obliged entities under the AML Act should consider when assessing the money laundering and terrorist financing risks associated with a business relationship or an occasional transaction.
Read the revised Guidelines in full: EBA publishes final revised Guidelines on money laundering and terrorist financing risk factors | European Banking Authority (europa.eu) 

• The Finnish Government proposal regarding amendments to the Act on Preventing Money Laundering and Terrorist Financing

The final Finnish government proposal regarding amendments to the Act on Preventing Money Laundering and Terrorist Financing has been published. The legislative amendments are expected to enter into force on 1 April and 1 September 2021.
Read the proposal in full (Finnish only): HE 261/2020 vp (eduskunta.fi)

ESG and Sustainable Finance

• Final report on RTS and joint ESA supervisory statement on the application of the SFDR

The European Supervisory Authorities (ESAs) have published their final report and draft Regulatory Technical Standards (RTS) under the Regulation on sustainability-related disclosures in the financial services sector (SFDR). Furthermore, the ESAs have published a joint supervisory statement on the application of the SFDR. The objective of the supervisory statement is to ensure consistent application of the SFDR within the period from the application date of the SFDR (10 March 2021) to the application date of the RTS.
Read more: The three European Supervisory Authorities publish Final Report and draft RTS on disclosures under SFDR (europa.eu)
ESAs issue recommendations on the application of the Regulation on sustainability-related disclosures (europa.eu) 

• ESAs’ letter to the European Commission regarding priority issues relating to the application of the SFDR

The ESAs sent a letter to the European Commission regarding several important areas of uncertainty in the interpretation of SFDR. The priority areas relate to the application of the SFDR on registered and non-EU AIFMs, the application of the 500-employee threshold for principal adverse impact reporting, the meaning of promotion in the context of product promoting environmental or social characteristics, the application of Article 9 SFDR and the application of SFDR product rules to portfolios and dedicated funds.
Read in full: jc_2021_02_letter_to_eu_commission_on_priority_issues_relating_to_sfdr_application.pdf (europa.eu)

• ESAs consult on Taxonomy-related product disclosures

The ESAs have issued a consultation paper seeking input on draft RTS regarding the disclosures of financial products investing in economic activities that contribute to an environmental investment objective. The proposed RTS create a single rulebook for the SFDR and the Taxonomy Regulation.
Read in full: ESAs consult on Taxonomy–related product disclosures (europa.eu)

PRIIPS KID

• EIOPA’s board of supervisors agree on changes to the PRIIPS Key Information Document

The ESAs have submitted draft RTS to the European Commission on amendments to the Key Information Document for packaged retail and insurance-based investment products (PRIIPs).
Read in full: EIOPA’s Board of Supervisors agrees on changes to the PRIIPs key information document | Eiopa (europa.eu)

News by Company Sector

Funds and fund management companies

• ESMA launches a common supervisory action with NCAs on the supervision of costs and fees of UCITS

ESMA is launching a common supervisory action (CSA) with National Supervisory Authorities (NCAs) on the supervision of costs and fees of UCITS across the EU. The CSA aim to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework, and the obligation of not charging investors with undue costs.
Read in full: ESMA launches a Common Supervisory Action with NCAs on the supervision of costs and fees of UCITS (europa.eu)

• ESMA publishes Cloud Outsourcing Guidelines

ESMA has published a final report on its Guidelines on outsourcing to cloud service providers. The Guidelines are intended to help firms identify, address and monitor the risks arising from cloud outsourcing arrangements.
Read in full: ESMA publishes cloud outsourcing guidelines (europa.eu)

Insurance companies

• EIOPA identifies business model sustainability and adequate product design as strategic supervisory priorities

EIOPA has identified business model sustainability and adequate product design as two Union-wide strategic supervisory priorities relevant for NCAs.
Read in full: Business model sustainability and adequate product design identified as new strategic supervisory priorities for national supervisors | Eiopa (europa.eu) 

Investment firms

• ESMA updates Q&A on costs and charges

ESMA’s Q&As on MiFID II and MiFIR investor protection and intermediaries’ topics includes one new Q&As on ‘Information on costs and charges’ that aim to give guidance on how firms can present ex-post costs and charges information to clients in a fair, clear and not misleading manner.
Read in full: ESMA updates Q&A on costs and charges (europa.eu)

• EBA publishes final draft technical standards under the IFD and IFR

EBA has published a number of final draft Technical Standards under the IFD and IFR, related to e.g. the prudential treatment of investment firms, identifying investment firms’ risk takers and variable remuneration.
Read more: EBA publish final draft technical standards on the prudential treatment of investment firms | European Banking Authority (europa.eu)
EBA publishes final draft technical standards to identify investment firms’ risk takers and to specify the instruments used for the purposes of variable remuneration | European Banking Authority (europa.eu) 

For more information please contact:

Olli Kiuru

Partner

Katarina Rosenström

Senior Associate

Daniela Fredman

Associate

Not all those who wander are lost; not all those who work are employed

Most employees work in a traditional employment relationship. However, work is also performed in circumstances where labour legislation does not extend its protection to workers. While the position of workers may in many ways resemble the position of employees, the details may be crucial. This article highlights what employers need to know about who is classified as an employee in the gig economy. Read more

Mehiläinen/Pihlajalinna tie-up falls apart in the Market Court

The Market Court has rendered its much awaited, albeit brief, decision in the case concerning the proposed “3 to 2” merger in the Finnish health care market between Mehiläinen Yhtiöt Oy and Pihlajalinna Oyj on 29 December 2020. The Market Court did not rule on the merits of the proposed merger due to the deal having been abandoned. Read more

The Effects of UK leaving the EU on EU Trademarks and Community Designs

After 1 January 2021, UK is no longer part of the EU. Consequently, EU trademark applications and Community design applications filed after 31 December 2020 will no longer receive protection in the UK.

In relation to existing EU trademarks, Community designs, unregistered Community designs as well as any pending applications, the UK trademark authority has agreed to take following measures: Read more

International transfers of personal data – recent developments post CJEU Schrems II judgement

In July 2020 the Court of Justice of the European Union (CJEU) delivered its judgement in the Schrems II case where the CJEU declared that the Privacy Shield mechanism, enabling a legal transfer of personal data from the EEA to the US, is invalid. This mainly because US laws, not following the principle of proportionality included in the GDPR, allow excessive access and use by US surveillance authorities to personal data. Also, there is no remedy available to EU data subjects to ensure protection of their personal data after it has been transferred to the US. Organizations that have relied on the Privacy Shield mechanism must post Schrems II have alternative transfer mechanisms in place in order to be able to legally transfer personal data from the EEA to the US. Such alternative transfer mechanisms may, amongst others, include Standard Contractual Clauses (SCC). Read more

New rules concerning non-compete obligation in employment contracts

Under the Employment Contracts Act, the employer and the employee may agree on a non-compete obligation only in limited circumstances. However, in practice the criteria have been vague and non-compete obligations have been more commonly used than what was intended. The reform of the Employment Contracts Act aims to change this situation and force employers to carefully consider when to include non-compete obligation in an employment contract. Read more

Marketing of UK funds in Finland after the end of Brexit transitional period

ORIGINALLY PUBLISHED ON 14 OCTOBER 2020, UPDATED ON 4 NOVEMBER 2020

The Finnish Financial Supervisory Authority (“FIN-FSA”) has on 13 October 2020 issued guidance regarding funds and fund managers (AIFMs and UCITS) domiciled in the United Kingdom as regards enabling uninterrupted marketing activities in Finland after the end of the Brexit transitional period on 31 December 2020.  Read more

Interest rates and direct marketing of consumer loans to be temporarily restricted as of 1 July 2020

The Finnish parliament has on 16 June 2020 approved the government’s proposal regarding certain amendments to the legislation on consumer loans due to the coronavirus outbreak. According to the new temporary legislation, the applicable interest rate on consumer loans will be temporarily capped at 10 per cent instead of the current 20 per cent. Also, any direct marketing to consumers will be banned. These restrictions are scheduled to enter into force on 1 July 2020 and apply until 31 December 2020. Read more

Impact of COVID-19 on Finnair – Legal and contractual issues

The Finnish government has started to gradually lift COVID-19 restrictions as Finnish society
steadily aims to resume its former course. Accordingly, schools began to reopen from 14 May 2020
and restaurants from 1 June 2020. However, some of the restrictions will remain in force until the
end of October 2020 and will be revisited periodically. A hopeful sign for the transport sector in
general is that the state-owned railway operator VR has announced that it aims to return to
approximately 85% of normal traffic levels starting from mid-June 2020. Read more

First four administrative fines issued for non-compliance with the GDPR in Finland

The first four fines for non-compliance with the GDPR were issued in Finland in end May 2020. The fines were imposed by the Collegial Body of the Finnish Data Protection ombudsman (DPA), who began its work in end September 2019 only. All four decisions concern infringements of very basic GDPR obligations and principles such as not providing data subjects with required information, failure to carry out data protection impact assessments and collecting unnecessary personal data. Read more