Financial regulation

Finanssivalvonta, or the Finnish Financial Supervisory Authority (FIN-FSA), is the authority for supervision of Finland’s financial and insurance sectors. The entities supervised by the authority include banks, insurance and pension companies as well as other companies operating in the insurance sector, investment firms, fund management companies, virtual currency providers and the Helsinki Stock Exchange. The FIN-FSA identifies the problems encountered by the markets and supervised entities and takes appropriate action. The supervision supplements controls undertaken by supervised entities and markets themselves. The FIN-FSA ensures that the supervised entities are professionally managed and that they have adequate risk management systems in place and operate according to ethically and professionally qualitative business principles and practices.

Rahoitusvakausvirasto, or, the Financial Stability Authority protects depositors and taxpayers from the effect and expenses of financial crises. It also prevents financial crises and promotes bail-in as part of the Single Resolution Mechanism. It is responsible for the Finnish deposit guarantee system.

Depending on the type of firm, a firm must apply to the Finnish Financial Supervisory Authority (FIN-FSA), Ministry of Finance, Ministry of Social Affairs and Health or the Finnish government for authorization. The FIN-FSA grants authorizations for credit institutions, Finnish life, non-life and reinsurance companies, investment firms, fund management companies and custodians.

The application forms, instructions and list of required appendixes are available at the FIN-FSA web page in Finnish and Swedish. The FIN-FSA shall assess whether the application meets the required threshold conditions within three to twelve months of the submission of the complete application.

Authorization is granted only when the entity seeking authorization meets the necessary regulatory requirements. The key pre-condition is that the entity is managed in a professional manner and in line with sound and prudent business principles. The entity must have sound internal governance and adequate financial resources. The entity’s headquarters must be located in Finland.

The FIN-FSA authorizations fee depends on the type of the application ranging from €3,700 to €14,300.

Virtual currency providers must be registered in the register of virtual currency providers maintained by the Financial Supervisory Authority (FIN-FSA). A foreign service provider may conduct its activities in Finland either by establishing a branch or by providing its services across the border. Commencement of activities is contingent on the authorization or notification procedure by the FIN-FSA.

Supervised firms and registered insurance intermediaries as well as service providers that have submitted a notification are listed on the FIN-FSA's list. This information is public and may be accessed from the website of the FIN-FSA.

Fulfilment of the prerequisites of authorization (such as having adequate financial resources and compliance arrangements in place) and acting in accordance with the applicable legislation are ongoing compliance requirements for authorized firms. Authorized entities may also have to comply with specific compliance requirements applicable to certain entities.

Entities supervised by the Finnish Financial Supervisory Authority (FIN-FSA) shall report various information regularly to the FIN-FSA.

Failure to comply with the authorization prerequisites and applicable legislation can result in administrative sanctions for firms and regulated individuals, and loss of authorization.

A person undertaking a regulated activity without being authorized or exempt commits a criminal offence and is liable to a fine or to imprisonment.

Generally

A person must not carry on a regulated activity in Finland unless authorized or exempt.

A financial activity requires regulatory authorization when it is identified as a specified activity in relation to a specified investment, it is carried on by way of business in Finland and it does not fall within any of the available exemptions.

The operations of a credit institution, investment firm, fund management company, alternative investment fund manager, custodian or insurance company can only be pursued by entities that have been granted authorization by the Finnish Financial Supervisory Authority (FIN-FSA). Virtual currency providers must be registered in the register of virtual currency providers maintained by the Financial Supervisory Authority (FIN-FSA).

Authorizations are regulated in the Credit Institutions Act, Investment Firms Act, Alternative investment fund manager Act, Mutual Funds Act, Insurance Companies Act and Act on Virtual Currency Providers. However, some of these acts include provisions which include conditions which also apply when the operations are not regarded as authorized business.

Consumer credit

Consumer credit activities are regulated activities. These activities can only be offered by firms that have been authorized by the FIN-FSA or equivalent authority in another EEA member state or registered as loan providers in accordance with the Act on Registration of Certain Loan Providers and Credit Brokers. The Consumer Protection Act applies to provision of consumer credit. In addition, the Act on Residential Property Consumer Credit Intermediaries regulates providing residential property consumer credit to consumers.

Consumer is defined in the Consumer Protection Act as a natural person who acquires consumer goods and services primarily for a use other than his or her business or trade (elinkeinotoiminnassaan).

Authorizations are regulated in the Credit Institutions Act, Investment Services Act, Alternative Investment Fund Manager Act, Mutual Funds Act, Insurance Companies Act and Act on Virtual Currency Providers. However, some of these acts include provisions which include conditions which also apply when the operations are not regarded as authorized business.

Finland does not operate any foreign currency controls.

Where money is transferred from non-EU member states, imports of foreign currency may need to be declared to customs, but there is no legal restriction on moving money in and out of the country.

There may be anti-money laundering (in accordance with EU Directives No. 2015/849/EU and No. 2015/847) and tax considerations to take into account.

Rules

According to applicable Finnish Financial Supervisory Authority (FIN-FSA) guidelines, marketing of financial services and instruments means all actions and operations aiming to promote the selling of financial services and instruments. Financial services include all services provided by the various regulated and authorized financial services providers and financial instruments include all instruments provided by the same service providers.

The rules governing marketing and offering of various financial services and instruments are not found in a single piece of legislation but are scattered into service provider and/or financial instrument specific legislation (for more information, see Law and regulation). The objective of the rules is to promote the clarity and high quality of customer and investor information on products and services offered and to ensure appropriate code of conduct of service providers.

The FIN-FSA has issued regulations and guidelines on marketing financial services and instruments as well as regulations and guidelines on codes of conduct when offering financial services and instruments that apply to all service providers and instruments. As a general rule, the rules and guidelines apply both to domestic service providers, such as deposit banks, credit institutions, payment institutions, investment firms, fund management companies, managers of alternative investment funds and insurance companies, and to Finnish branches of EEA-authorized service providers as well as EEA-authorized service providers providing cross-border services in Finland.

In addition to the service provider and instrument specific legislation, the Unfair Business Practices Act includes general requirements on marketing and conducting business in Finland and the Consumer Protection Act regulates financial promotions directed to consumers. These apply also to providers of virtual currencies. The requirements aim to ensure that, among other things, a company’s marketing is in accordance with good and acceptable practices, no improper procedures are undertaken and sufficient information is given to consumers prior to entering into a contract.

Exemptions

The applicable marketing and offering of financial services and products rules differ depending on the type of the customer. Marketing and offering to consumers and non-professional (private) clients is more strictly regulated than the same towards professional clients and eligible counterparties, which may be exempted from certain requirements.

As regards securities offering, offering securities to the public is more regulated than private placements. According to the Securities Market Act, offering securities to the public means a communication to persons presenting or intended to present sufficient information on the terms of the offer and the security offered, so as to enable to decide to purchase or subscribe to the security.

The Finnish rules are generally applicable also to Finnish branches of EEA-authorized service providers as well as EEA-authorized service providers providing cross-border services in Finland, but there are certain exemptions. For example, the FIN-FSA marketing guidelines do not apply to EEA-authorized service providers providing cross-border investment services in Finland.

Generally

The most common type of legal entity is a limited liability company regulated by the Limited Liability Companies Act. A limited liability company is a body corporate with separate legal personality and which limits the liability of its members. A limited liability company can be either private or public depending on whether or not the shares are offered to the public.

The liability of a company's shareholders is limited by shares (i.e. to the invested share capital), in which case they are liable to pay for their shares but not the company's debts. However, if the shareholders have given separate guarantees for the company’s obligations they are also liable for the amount guaranteed if the company does not fulfil the guaranteed obligation.

In addition, many Finnish Banks (usually credit institutions) are established as cooperatives (osuuskunta). Cooperatives are owned by their members and are thus similar to limited liability companies.

In addition, limited partnerships can undertake investment activities. Limited partnerships are formed by a private agreement, which is signed by all of the partners.

Funds

Investment funds can take the form of limited partnership when they are classified as alternative investment funds. Mutual funds and special mutual funds are defined as a pool of acquired assets and they are not legal persons. They are managed by fund management companies, who manage the funds in their own name but on behalf and for the benefit of the fund.

Yes, provided however, that if the company conducts any authorized activities it must be authorized in another EEA country.

A company can conduct lending or investment business in Finland through a branch but this does not create a separate legal entity. The foreign trader must submit a start-up notification concerning its branch to the Finnish Patent and Registration Office before the branch commences its operations. If the business to be conducted and the services to be provided are regulated activities (i.e. it is a branch to a credit institution, insurance company, investment company or management company) then the Finnish Financial Supervisory Authority (FIN-FSA) must also be notified.

If the trader is from a country outside the EEA, it will also need a permit from the Finnish Patent and Registration Office, as well as the FIN-FSA for the establishment of the branch.