News & Views

Legal Update: Virtual Currency Providers Are Required to Comply With New Finnish Rules

2 July 2019

Authors: Pauliina Sutinen and Sanna Boow

Finnish rules affecting the current and new virtual currency providers (i.e. cryptocurrency providers) have now come into force. As referred in our previous blog post, the Act on Virtual Currency Providers (572/2019) applies as of 1 May 2019. The Finnish Financial Supervisory Authority (the “FIN-FSA”) has also issued its Regulations and Guidelines 4/2019 concerning virtual currency providers, and they apply as of 1 July 2019 (available only in Finnish).

Also, the Finnish Act on Preventing Money Laundering and Terrorist Financing (444/2017, as amended) together with the FIN-FSA’s Standard 2.4 on Customer Due Diligence with respect to the prevention of money laundering and terrorist financing will also apply to virtual currency providers as of 1 December 2019.

Virtual Currency Providers Subject to the FIN-FSA’s Supervision

The current and new virtual currency providers are required to comply with the following obligations, among other things:

  • The obligation to register with the FIN-FSA (18 August 2019 as a deadline for the virtual currency providers that have been active in the market prior to 1 May 2019 to submit their registration application)
  • The obligation to make a risk assessment regarding holding and protecting its client funds
  • The obligation to deposit client funds (i) to an account held by a central bank, a deposit bank, or a licensed credit institution, or (ii) in the form of other low-risk securities or other investment instruments that are easily converted into money (subject to certain limitations)
  • The obligation to protect its client funds in its information systems (including, for example, limitations to hold client funds in an information system that is connected to a public network)
  • The obligation to comply with anti-money laundering requirements, such as KYC and reporting obligations (including identifying clients’ beneficial owners)

International Guidance Issued by the FATF

On 21 June 2019, the Financial Action Task Force (the “FATF”) issued its Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers. The guidance includes, for example, clarifications on the application of anti-money laundering and counter-terrorist financing requirements on virtual assets and virtual asset service providers. The same FATF’s measures will apply to virtual asset service providers, as apply to financial institutions.

Hannes Snellman Assists in Virtual Currency Matters

Hannes Snellman is happy to assist in matters relating to virtual currencies, registration of virtual currency providers, and ICOs, as well as any other financial services-related issues.