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Finland Sees Uptick in Financial Crimes: Obligated Entities Urged to Step Up Risk Assessments

In an effort to combat the growing threat of money laundering and terrorist financing, Finland’s financial regulator, the Financial Supervisory Authority (FIN-FSA), is warning obligated entities to bolster their risk assessments in line with the Anti-Money Laundering Act.

Lack of Risk Assessment a Major Concern

According to industry experts, many obligated entities have been found to be lacking in their efforts to identify and mitigate risks associated with money laundering and terrorist financing. As a result, the FIN-FSA has issued a stern reminder that a thorough risk assessment is essential for ensuring compliance with anti-money laundering regulations.

What is Risk Assessment?

“The purpose of the risk assessment is to make each obligated entity identify and understand the risks of money laundering and terrorist financing related to its activities,” explained a spokesperson for the FIN-FSA. “By conducting a risk assessment, obligated entities can adjust their risk management methods in proportion to the risk, thereby reducing the likelihood of financial crimes.”

Key Considerations for Obligated Entities

When preparing their risk assessments, obligated entities should consider the following:

• Documenting the process
• Ensuring that customer due diligence requirements are met based on identified risks

Consequences of Non-Compliance

While there is no standard format for a risk assessment, obligated entities must demonstrate to the FIN-FSA that their methods concerning customer due diligence and ongoing monitoring are adequate in view of the risks of money laundering and terrorist financing. Failure to comply with anti-money laundering regulations may result in severe penalties, including fines and reputational damage.

Recommendations for Obligated Entities

Industry experts recommend that obligated entities focus on identifying vulnerabilities related to:

• Products and services
• Distribution channels
• Technologies

By taking a risk-based approach to customer due diligence, obligated entities can minimize the risk of financial crimes and ensure compliance with anti-money laundering regulations.

Conclusion

Finland’s financial regulator is urging obligated entities to step up their risk assessments in order to combat the growing threat of money laundering and terrorist financing. By prioritizing risk assessment and mitigation, obligated entities can reduce the likelihood of financial crimes and maintain a strong reputation in the market.