The operating environment of the financial sector deteriorated in 2023, as the high inflation and interest rate level as well as weakening economic growth took a toll on households and companies. This was also reflected in the housing and real estate markets where the Finnish financial sector has exposures. In its supervision, the FIN-FSA paid particular attention to the management of risks stemming from the operating environment. This topic is discussed in the article “Real estate risks increased as a result of weak economic development and rising interest rates”.

During the review year, the AML Act was amended so that, as part of their customer due diligence procedures, entities obliged under the Act must also consider financial sanctions and national freezing orders issued to prevent the financing of terrorism. Among other things, the FIN-FSA prepared guidance for supervised entities on sanctions risk management. The article “Sanctions as part of the FIN-FSA’s supervisory work” discusses this topic.

The article “The FIN-FSA’s thematic reviews examined the current state of climate and environmental risk management in the banking and insurance sectors” discusses thematic reviews about climate and environmental risks conducted by the FIN-FSA in 2023 at banks and insurance sector operators. The reviews focused on the present state of climate and environmental risk management as well as climate risk exposures. It is important in both sectors that both the operators and the supervisor are well aware of the kind of effects climate risks have on the operators and how these risks are managed.

In 2023, the FIN-FSA began to develop its activities towards the vision of begin a proactive and predictable supervisor. The article “Proactive and predictable supervision” describes how the supervisor sees proactivity and predictability in its supervisory work and what the development efforts have encompassed in the first year.