On 16 August 2022 the Global Forum for Transparency and Exchange of Information for Tax Purposes released a second round peer review report in relation to Finland. The peer review report examines the legal and regulatory framework in Finland and its compliance with the international standard on transparency and exchange of information on request (EOIR). The second round peer review report rates Finland as largely compliant with the relevant standard.
Since the first round peer review, Finland has amended its legislation to implement the EU’s fourth anti-money laundering (AML) directive, modifying the definitions of beneficial ownership for legal entities and legal arrangements to ensure that they meet the requirements. The legislation now requires Finnish legal entities and Finnish trustees of foreign trusts to keep information on their beneficial owners. If there are changes in beneficial ownership the relevant register must be kept up to date. The central beneficial ownership register was introduced in 2019 and can be accessed by supervisory authorities and by entities with reporting obligations under the AML regulations. The tax administration can access the register to check beneficial ownership when a request for exchange of information is received.
The tax legislation has been updated to ensure that all foreign entities with a place of effective management in Finland are tax resident. Tax residents are required to provide information on beneficial ownership, so this is another source of this information in relation to foreign entities.
The peer review report notes that not all definitions of beneficial ownership are in line with the standard, including the definition of beneficial ownership that must be used by AML reporting entities in their due diligence process for corporate entities, and the definition used by legal entities for compiling their register of beneficial ownership. Deficiencies have also been identified in the procedure for ensuring the information is up to date, and there are insufficient penalties for failure to update the information. The supervisory authorities and the entities reporting under the AML do not have a sufficiently clear understanding of the application of the beneficial ownership definitions.
The report therefore recommends that Finland should take measures to ensure that up to date beneficial ownership information is available for relevant legal entities and arrangements and for bank accounts. Effective sanctions should be introduced for failure to supply sufficient information for the beneficial ownership register.
In the period under review Finland received almost 800 requests for information. Replies were given within 90 days in the case of 99% of the requests. Finland has efficient procedures for dealing with requests for information and partner countries reported efficient cooperation.
The report notes that Finland’s network of agreements covers 155 jurisdictions, including the agreements not yet in force. The network includes regional partners, EU member countries, the neighbouring countries and the main trading partners.