Preventing money laundering and terrorist financing: new perspectives and the guidelines of the Financial Supervisory Authority

A few years ago, I would not have guessed that I could get professionally excited about the topic of preventing money laundering and terrorist financing. However, this has happened. My article deals with the monstrosity of words “HR3C”, which stands for high-risk third countries from an anti-money laundering and countering the financing of terrorism (AML) point of view. According to the Money Laundering Act, banks have been obliged to follow enhanced customer due diligence procedures in a situation where the bank’s customer sends or receives a payment to a high-risk country listed by the European Commission (HR3C).

So what happened in August 2023 when the Commission added new countries to the HR3C list? A rather big challenge arose as to how to manage the growing volumes in terms of the obligations to know customer payments. Let me give you an example: Dubai is a perennial favorite of Finnish tourists as a warm vacation spot. When the Commission added the United Arab Emirates to the HR3C list, in practice it meant that the watchdogs had an obligation to investigate ‘coffee cup payments’ made on tourist trips. We can agree that payments made by customers on tourist trips are not the AML risks that anyone should spend time on, or especially an enhanced customer familiarization procedure, which is quite an extensive and heavy process.

I just listened to the Financial Supervisory Authority’s seminar on AML and was pleased to note that the Financial Supervisory Authority gave good guidelines to banks on how to proceed with HR3C transactions. Here are a couple of points that I would like comments on. Banks were given the opportunity to operate on a risk basis. This is a prerequisite for us to focus the banks’ resources on the right things. Fiva gave a preliminary “amnesty” that if the payments were understandable, small and short-term, the banks could in the future operate on a risk-based basis, i.e. without an enhanced familiarity procedure (EDD). A single small payment in euro terms in the short term would not immediately constitute an obligation to the EDD procedure.

I am happy to accept these preliminary guidelines from Fiva, which are in the right direction. On this matter, when we are all united as a front to prevent money laundering. #aml #HR3C #Finanssivalvonta #amlcft #transactionmonitoring #kyc

Author Katja Oulasvirta