Financial Supervisory Authority statement on a simplified customer due diligence procedure – private road maintenance associations and joint ownership associations managing common water areas

Due to numerous enquiries it has received, the Financial Supervision Authority (FIN-FSA) has decided to publish a statement on a simplified procedure for customer due diligence with regard to private road maintenance associations and joint ownership associations managing common water areas.

The FIN-FSA has received numerous contacts and questions about how supervised entities should adjust their customer due diligence measures to the risks posed by money laundering and terrorist financing when the customer is a private road maintenance association. The FIN-FSA has become aware that in some cases private road maintenance associations have been required to have a business ID for banking purposes. Similar questions have also been raised in relation to joint ownership associations managing common water areas.

Main content of statement

The FIN-FSA considers that

• when a private road maintenance association only engages in private road maintenance activities and there are no other special factors that would increase the risk of money laundering and terrorist financing associated with customer relationships, the risk of money laundering or terrorist financing associated with the customer relationships of the private road maintenance association is low;
• when a joint ownership association managing a common water area only engages in water area management and activities customarily related to the fishing associated with this, and there are no other special factors that would increase the risk of money laundering and terrorist financing associated with customer relationships, the risk of money laundering or terrorist financing associated with the customer relationships of the joint ownership association is low;
• where the risk of money laundering or terrorist financing associated with the customer relationships of private road maintenance associations and joint ownership associations managing common water areas is low, supervised entities may follow a simplified customer due diligence procedure;
• when private road maintenance associations and joint ownership associations managing common water areas do not engage in activities prescribed in section 3 of the Business Information Act, they need not be registered in the Business Information System in order to initiate and continue customer relationships.

A Government decree will lay down more detailed provisions on the customers, products, services, payment transactions, delivery methods or geographical risk factors that may involve a low risk of money laundering or terrorist financing, and the procedures to be followed in such situations. The FIN-FSA emphasises that, under the Money Laundering Act, supervised entities can already follow a simplified due diligence procedure if, based on their own risk assessment, they consider that customer relationships or individual transactions involve a low risk of money laundering and terrorist financing. Supervised entities may adjust the amount, timing or type of customer due diligence measures in a way that is commensurate to the low risk they have identified in their risk assessment.

Validity of the statement

The FIN-FSA will re-assess the necessity of this statement at the stage when the Government decree has laid down more detailed provisions on the customers, products, services, payment transactions, delivery methods or geographical risk factors that may involve a low risk of money laundering or terrorist financing, and the procedures to be followed in such situations.

For further information, please contact

Jonna Ekström, Senior Legal Advisor, telephone +358 9 183 5531 or jonna.ekstrom(at)fiva.fi

Appendix

FIN-FSA's statement: On a simplified customer due diligence procedure – private road maintenance associations and joint ownership associations managing common water areas