The Financial Supervisory Authority granted five registrations as virtual currency provider – scope of supervision is the prevention of money laundering
From 1 November 2019, only virtual currency providers who fulfil the requirements provided by legislation may practice activities in Finland. Compliance with requirements is ensured in the form of an obligation to register, and virtual currency providers that complete the registration process are entered in the FIN-FSA’s register. The registration process requires significant effort from the applicants, for example concerning customer due diligence and written documentation of activities.
“Registration that is based on anti-money laundering regulation is the first step in the regulation of virtual currency providers. Despite the registration obligation and the regulation that has now entered into force, virtual currencies are still, in many ways, high-risk investments,” notes Hanna Heiskanen, Senior Digitalisation Specialist.
During the registration process, the FIN-FSA assesses whether the applicant has adequate procedures for the prevention of money laundering and terrorist financing, the adequacy of the holding and safeguarding of client assets and whether the applicant's management and key staff fulfil the fitness and propriety criteria. The applicants submit to the FIN-FSA written statements in which they describe their compliance with the requirements. After the FIN-FSA has granted the registration, it will monitor compliance with the requirements, for example by requesting clarifications and performing inspections.
Unauthorised provision of virtual currencies is prohibited in Finland and subject to a fine
The FIN-FSA supervises that only registered virtual currency providers provide such services in Finland. New providers of virtual currencies may not start the provision of services in Finland before their registration application has been approved. If the virtual currency provider does not comply with the requirements, its activities will be prohibited and the FIN-FSA will impose a fine on the provider.
Virtual currencies are still high-risk investments despite the registration obligation
Supervision and registration do not affect the characteristics of virtual currencies and the risks associated with investing in virtual currencies. The risks include extreme and abrupt price volatility, information security threats on exchange platforms and wallet providers and the fact that many virtual currencies are used as speculative investments.
Virtual currency providers are not subject to statutory risk management and capital adequacy requirements. The regulation and supervision of virtual currency providers is not as comprehensive as that of other financial sector entities.
The provision of virtual currencies is international and cross-border activity. Finnish investors in virtual currencies may therefore use services provided by a virtual currency provider operating from another country.
“Those considering investing in virtual currencies should find out whether the service provider is supervised by a national competent authority. It is advisable to study the risks carefully. Potential investors should also examine the contract terms thoroughly,” says Heiskanen.
Act on Virtual Currency Providers is based on the EU’s anti-money laundering legislation
It is an internationally recognised fact that virtual currencies and related services entail a high risk of money laundering and terrorist financing. The directive on the prevention of money laundering and terrorist financing has now been extended to cover virtual currency providers throughout the EU. This enhances authorities’ powers and access to information in the prevention, detection and investigation of money laundering and terrorist financing.
Even though the requirement for the registration and supervision of virtual currencies is based on EU regulations, registration granted by a national competent authority of a Member State does not give the service provider authorisation to provide services in other EU Member States.
See also
Keywords
Contacts
For further information, please contact:
Hanna Heiskanen Senior Digitalisation Specialist. Requests for interviews are coordinated by FIN-FSA Communications, tel. +358 9 183 5030, weekdays 9.00–16.00.
About Finanssivalvonta
Finanssivalvonta, or the 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 and the Helsinki Stock Exchange. We foster financial stability and confidence in the financial markets and enhance protection for customers, investors and the insured.
Subscribe to releases from Finanssivalvonta
Subscribe to all the latest releases from Finanssivalvonta by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Finanssivalvonta
Kapitaltäckning och solvens i den finansiella sektorn 31.3.2024: Fortsatt stark kapitaltäckning och solvens i Finlands finansiella sektor trots osäker omvärld13.6.2024 10:40:00 EEST | Tiedote
Finlands ekonomi vände från recession till mycket svag tillväxt i början av året, men den finansiella sektorns omvärld präglas fortfarande av osäkerhet. Trots det svaga ekonomiska läget är kapitaltäckningen inom banksektorn fortfarande stark, fastän andelen krediter med en betydligt förhöjd kreditrisk ökat både inom hushålls- och företagskrediter. Arbetspensionsanstalternas solvensnivå stärktes under det första kvartalet, medan liv- och skadeförsäkringsbolagens solvens försvagades något. Det geopolitiska läget är fortfarande spänt och ränteutsikterna är osäkra, vilket ökar riskerna i den finansiella sektorn.
Finanssisektorin vakavaraisuus 31.3.2024: Suomen finanssisektorin vakavaraisuus säilyi edelleen vahvana epävarmassa toimintaympäristössä13.6.2024 10:40:00 EEST | Tiedote
Suomen talous kääntyi taantumasta hyvin vaisuun kasvuun alkuvuonna, mutta epävarmuus leimaa yhä finanssisektorin toimintaympäristöä. Heikosta taloustilanteesta huolimatta pankkisektorilla vakavaraisuus on säilynyt vahvana, vaikka sekä kotitalous- että yritysluotoissa luottoriskiltään merkittävästi kohonneiden luottojen osuudet ovat olleet kasvussa. Työeläkelaitosten vakavavaraisuusaste vahvistui ensimmäisellä neljänneksellä, mutta henki- ja vahinkovakuutusyhtiöillä se heikkeni hieman. Geopoliittinen tilanne on pysynyt jännitteisenä ja korkonäkymät epävarmoina, mikä lisää finanssisektorin riskejä.
Financial sector's capital position as at 31 March 2024: Finnish financial sector’s solvency remained strong in an uncertain operating environment13.6.2024 10:40:00 EEST | Press release
The Finnish economy moved from recession to very sluggish growth in the early months of the year, but the financial sector's operating environment is still marked by uncertainty. Despite the weakness of the economy, the banking sector's capital position has remained strong, although in both household and corporate credit the share of stage 2 loans has been growing. The solvency ratio of employee pension institutions strengthened in the first quarter, but that of life and non-life insurance companies weakened slightly. Geopolitical tensions remain and the outlook for interest rates is uncertain, which increases the financial sector’s risks.
Finansinspektionen utredde tillgången på grundläggande banktjänster - inga betydande ändringar i tillgången eller prissättningen jämfört med tidigare12.6.2024 14:00:00 EEST | Tiedote
Kundernas rätt till lagstadgade grundläggande banktjänster tillgodoses i huvudsak bra i Finland. Enligt Finansinspektionens bedömning var tillgången till grundläggande banktjänster fortfarande bra och priserna i huvudsak skäliga 2023. Uppgifterna i utredningen baserar sig på situationen vid årsskiftet den 31 december 2023.
Finanssivalvonta selvitti peruspankkipalveluiden saatavuutta - saatavuudessa tai hinnoittelussa ei merkittäviä muutoksia aiempaan12.6.2024 14:00:00 EEST | Tiedote
Asiakkaiden oikeus laissa määriteltyihin peruspankkipalveluihin toteutuu Suomessa pääosin hyvin. Finanssivalvonnan arvion mukaan peruspankkipalveluja oli vuonna 2023 edelleen hyvin ja pääosin kohtuuhintaisesti tarjolla. Selvityksen tiedot perustuvat vuodenvaihteen 31.12.2023 tilanteeseen.
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.
Visit our pressroom