Financial Crime World

Banking Sector in Finland Tightens Bolts on Compliance Procedures

Finland’s banking sector is undergoing significant changes as it navigates an increasingly complex regulatory landscape. With over 200 banks operating in the country, including domestic deposit banks and foreign branches and subsidiaries, compliance with laws and regulations has become a top priority.

Regulatory Landscape

The Financial Supervisory Authority (FSA) and the European Central Bank (ECB) are tasked with overseeing compliance with key legislation such as the Act on Credit Institutions. This law sets out stringent requirements for banking activities, including capital adequacy standards that must be met to ensure financial stability.

Key Legislation

  • Act on Credit Institutions: Sets out stringent requirements for banking activities, including capital adequacy standards.
  • Deposit Guarantee Fund (DGF): Provides compensation for insured deposits up to €100,000 per depositor.

Financial Stability

The banking sector has also seen a rise in financial groups, with foreign ownership playing a significant role. These groups typically comprise a deposit bank and other businesses operating in the financial sector, such as fund management companies and insurance firms.

Financial Groups

  • Deposit Banks: Provide basic banking services to customers.
  • Fund Management Companies: Manage investment funds on behalf of clients.
  • Insurance Firms: Offer insurance products to protect against risks.

Compliance Procedures

Regulatory reforms have been accelerated in recent years due to the global financial crisis, and many of these changes are still being implemented. FFI (Finnish Financial Institutions) has taken steps to address this by establishing principles for Good Banking Practice, which sets out a common code of conduct for the sector.

Principles for Good Banking Practice

  • Transparency: Banks must be transparent in their dealings and provide clear information to customers.
  • Fairness: Banks must treat customers fairly and without bias.
  • Professionalism: Banks must maintain high standards of professionalism and integrity.

Finance Houses

Finance houses, an integral part of Finland’s banking landscape, provide essential financing for investments. With dozens operating in the country, these firms are subject to the same regulatory requirements as credit institutions and must comply with the Act on Credit Institutions.

Regulatory Requirements

  • Act on Credit Institutions: Finance houses must comply with the Act on Credit Institutions.
  • Deposit Guarantee Fund (DGF): Finance houses are subject to the Deposit Guarantee Fund (DGF) scheme.

Conclusion

As the banking sector continues to evolve, it is clear that compliance procedures will play a crucial role in ensuring stability and integrity. By implementing robust compliance procedures, banks can ensure that they meet regulatory requirements and maintain the trust of their customers.