Regarding suspicions of terrorist financing, supervised entities are subject to the same obligations as regards suspicions of money laundering. However, there is a difference in that money laundering is associated with a suspicion concerning the lawful origin of the funds, whereas terrorist financing may also take place using legally acquired funds, for example, in connection with money collection or money transfer operations. Accordingly, the suspicion focuses on the use of funds.
International financial sanctions
International financial sanctions refer to the freezing of funds or other financial resources of sanctioned parties. The sanctions are used to respond to various threats to international peace and security, including terrorism. This means that sanctions are directly focused on, for example, individual natural persons, companies or groups. The UN Security Council is one entity that imposes globally binding sanctions, but the EU and individual countries may also impose sanctions of their own. International financial sanctions to be applied in Finland are published in the Official Journal of the European Union.
In addition to financial sanctions, there are other international sanctions, such as export and import bans and bans on air and other travel. In Finland, the Ministry for Foreign Affairs has the main responsibility for coordinating the compliance monitoring of UN and EU financial sanctions.
National fund freezing decisions
The purpose of freezing decisions as referred to in the Act on the Freezing of Funds with a View to Combating Terrorism is to prevent a person, group or entity subject to such a decision from channelling funds under its control into terrorist financing. The Financial Intelligence Unit of the Finnish National Bureau of Investigation receives reports of suspicious business transactions, but it also analyses grounds for decisions to freeze funds, makes freezing decisions and adds persons, groups or entities subject to the decision to a public list, and makes decisions to remove such parties from the public list. Freezing decisions are published in the Official Gazette, and the Financial Intelligence Unit maintains a publicly available updated list of such decisions.
Financial sanctions and freezing decisions; binding effects for supervised entities
Decisions on international financial sanctions made by virtue of chapter VII of the UN Charter containing provisions related to the UN Security Council are binding for UN Member States and are implemented in the EU through EU Council regulations. The list of parties subject to sanctions may be altered through EU Council or EU Commission Implementing Regulations. The regulations constitute directly applicable legislation in all EU Member States after they have been published in the Official Journal of the European Union.
Freezing decisions based on national law are in Finland made by the Financial Intelligence Unit of the National Bureau of Investigation, and such decisions are implemented by the enforcement authority. The freezing decisions are considered as communicated to the parties subject to the reporting obligation at the latest on the day when the decision has been published in the Official Gazette.
All funds of persons, entities and groups subject to freezing decisions as referred to in EU regulations or made by the Financial Intelligence Unit must be frozen. In addition, direct or indirect assignment of funds and other financial resources to sanctioned parties or parties referred to in freezing decisions is prohibited. Supervised entities must take such measures as are required in related regulations and freezing decisions directly on the basis of the provisions in question without separate notice or order from the authorities. Failure to comply with such obligations is to be punished as a regulation offence under chapter 46 of the Criminal Code.
As a rule all funds of a sanctioned person are subject to freezing. The funds remain frozen until the UN Security Council, an EU body or the Financial Intelligence Unit change or revoke the related decisions. However, frozen funds may be freed for humanitarian reasons. In Finland, the Ministry for Foreign Affairs is entitled to make decisions concerning international sanctions. As regards national freezing decisions, possible exceptions to the freezing are disclosed in the decisions.
The supervised entity must comply with EU sanction regimes and national fund freezing decisions as well as changes of them and it must check its registers and monitor transactions to ensure that the funds of sanctioned parties remain frozen. Direct or indirect assignment or transmission of funds or other financial resources to such parties is prohibited, if the assignment is not arranged so that the assigned funds will be frozen.
If a supervised entity detects, in its registers or among its transactions, a party whose identification details correspond with those of parties subject to international sanctions or national freezing decisions, the entity subject to the reporting obligation must freeze the funds or abort the transaction and notify the Helsinki Enforcement Office.
The supervised entity should take into account that the basis for freezing funds may indicate suspicious transactions or terrorist financing as referred to in the Anti-Money Laundering Act.
If a supervised entity detects, in its registers or among its transactions, a party whose identification details do not fully correspond with those of parties subject to international sanctions or national freezing decisions but are nearly identical (for example, the identification details provided in the sanction list may be so insufficient that the supervised entity cannot decide on its own whether the party to be identified is sanctioned), the supervised entity should abort the transaction, notify the Helsinki Enforcement Office and act according to its instructions.