Financial Supervision Authority urges supervised entities to ensure that guidelines and systems for compliance with sanctions are up-to-date
The economic sanctions imposed by the EU are directly binding on all supervised entities of the Financial Supervisory Authority (FIN-FSA). Adherence to them is essential from the standpoint of supervised entities’ compliance and operational risk management.
The FIN-FSA urges supervised entities to ensure that their systems and instructions for complying with sanctions are up to date. If a supervised entity has information systems for detecting sanction lists (so-called sanction screening), it must ensure that up-to-date sanction listings are in place and that all software functions for checking the sanction lists are in use. If a supervised entity checks the sanctions lists manually, the inspections should be carried out frequently, as sanctions are currently changing rapidly.
Knowing customers thoroughly, including beneficial owners and the customer's business activities as well as cooperating with customers to determine the basis for payments and the parties involved, is particularly important.
Personal and entity sanctions
The scope of EU sanctions has been extended to several hundred Russian and Belarusian natural persons as well as dozens of companies and entities. In addition, sanctions have been imposed directly on Russian banks. The sanctions also apply to assets directly owned or controlled by the listed parties. As a result, supervised entities should check whether their customers include such persons or entities.
The FIN-FSA emphasises that funds and economic resources belonging to, owned, held or controlled by natural or legal persons, entities or bodies subject to sanctions must be frozen. In addition, it is prohibited, directly or indirectly, to make any funds or economic resources available to or usable by these parties. Supervisors must therefore ensure that a person or entity subject to sanctions is not in any way a party to a payment, either directly or indirectly.
Prohibited products and services
EU sanctions have been targeted at the financial sector as well as transactions between Finland and Russia. Some Russian banks have been excluded from the SWIFT system.
Other sectors subject to sanctions are the energy sector and the transport sector. The list of other dual-use items requiring an export licence has also been expanded and new export bans have been imposed.
The FIN-FSA emphasises that supervised entities must have sufficient information about the basis of their customers’ transactions and the parties to transactions as well as about the products and services that are the subject of payments. This will ensure that the FIN-FSA’s supervised entities do not participate in financing and payments for exports of prohibited products or services.
In addition, credit institutions are prohibited from taking deposits of more than EUR 100,000 from a Russian natural or legal person. There are many exceptions to this regulation, however.
More detailed information on the sanctions in force in response to the situation in Ukraine can be found on the website of the Ministry for Foreign Affairs (in Finnish). *In addition, on the “EU sanctions”page of the Commission website there is a link under “Financial sanctions” to an up-to-date consolidated list. By logging in with your own credentials to the Commission-maintained webgate service, you will receive various machine-readable versions of the list, or it is also possible to download the list in pdf format.
Action in case of possible sanction detection
If a supervised entity detects in its customer registers or payment transactions a party whose identification information corresponds to the information of the parties subject to sanctions, it must immediately freeze the funds or suspend the transaction and notify the Enforcement Authority of the matter by email to firstname.lastname@example.org. In addition, the Final Intelligence Unit has requested that it be notified in the event of suspicious transactions.
For further information, please contact
Pekka Vasara, Head of Division, telephone +358 9 183 5513
**On 16 March, the European Commission published its answers to frequently asked questions (FAQ) concerning restrictive measures (sanctions) against Russia. The document is available on the Commission’s website in English. The Commission (Directorate-General for Financial Stability, Financial Services and Capital Market Union, DG FISMA) also provides advice on these sanctions by email. You can send questions to the Commission by email to EC-RUSSIA-SANCTIONS@ec.europa.eu.
*Text added to the release on 9 March 2022.
**Text added to the release on 24 March 2022.
The corresponding Finnish-language supervision release was published on 4 March 2022.