Municipality Finance Plc’s practices concerning the detection and prevention of money laundering and terrorism financing
The operations of Municipality Finance Plc
Municipality Finance Plc (hereinafter “MuniFin”) is a credit institution that specialises in financing the Finnish municipal sector and government-subsidised social housing production. MuniFin operates under the Act on Credit Institutions. Its operations are supervised by the European Central Bank and the Finnish Financial Supervisory Authority.
In addition to the parent company, Municipality Finance Plc, the Municipality Finance Group includes the subsidiary company, Financial Advisory Services Inspira Ltd, which offers financial advisory services to the Finnish public sector.
MuniFin’s business involves providing its customers with financial products (credits, financial leasing, derivatives for hedging purposes). MuniFin does not take deposits, offer custody services, payment transfer services or services in which it acts on behalf of its customers toward third parties.
MuniFin acquires its funding by issuing bonds on international capital markets. In all of its funding transactions, MuniFin is assisted by renowned international banks which act as counterparties to these transactions. These banks then sell the bonds issued by MuniFin to their customers (investors).
MuniFin uses derivative instruments for hedging purposes and invests its liquidity in financial instruments in accordance with its investment policy.
Due to the nature of its business operations as described above, transactions in which MuniFin and its group companies engage are without exception entered into on their own account MuniFin does not therefore operate on behalf of other parties or as an intermediary.
Procedures for detecting and preventing money laundering and terrorism financing
MuniFin’s Anti-Money Laudering and Counter Terrorist Financing Policy (“AML Policy”), which has been approved by the Board of Directors and is amended at least yearly, forms the basis of procedures and processes for detecting and preventing money laundering and terrorism financing. The AML Policy is binding on all employees of MuniFin and other parties acting in the name of the company.
The AML Policy has been prepared bearing in mind the fact that the company’s business operations are, for the most part, linked only to Finnish municipalities, municipal federations, and non-profit developers designated (and guaranteed) by the Finnish state, as well as well-known and reputable Finnish and foreign commercial banks, whereby the company may, as a general rule, follow a simplified procedure permitted by legislation with regard to customer due diligence.
The basic principles of knowing and identifying the customer (customer due diligence)
MuniFin adheres to the legislation and official regulations and guidelines in force in all of its operations. For this reason, the company must identify its customers and the customers’ representatives by verifying their identity. Furthermore, MuniFin must know its customers, determine the purpose of customer relationships, map all risks related to customer due diligence and the prevention of money laundering and terrorism financing in its business operations and prepare procedures for limiting such risks. MuniFin continuously monitors its customers’ transactions concerning MuniFin. In the event money laundering or terrorism financing is suspected, MuniFin will submit the statutory notification to relevant authorities.
Documentation and monitoring as part of customer due diligence
All information pertaining to customers is maintained as part of customer documentation, in accordance with individual archiving instructions on the various documents. All information related to customer identification is stored for no less than five years after the customer relationship has ended. All employees working with customers are obliged to monitor the customer relationship and update information concerning the customer whenever needed.
Measures in suspicious situations
If it is suspected that a transaction involves money laundering or terrorism financing, the person responsible for compliance at MuniFin will assess the situation and circumstances in cooperation with the CEO and the CRO. They will decide on the necessary instructions and the submission of a notification, if any, to the Financial Intelligence Unit.
To protect any official investigation related to the situation and the employees of MuniFin, such suspicions or notifications are not disclosed to the customer.
MuniFin ensures that its customers are not included on the lists of international financial sanctions imposed by the United Nations (UN), the European Union (EU), UK Treasury and the US (OFAC). The company verifies its customer registers at regular intervals on the basis of sanctions lists.
All employees are trained regularly on the AML and KYC requirements. The person in charge of compliance at MuniFin ensures that all employees are informed of the requirements on external and internal regulation with respect to customer due diligence, and any changes to these. The Compliance department regularly assesses the need to make changes to the guidelines, and trains personnel in the ways required by the changes confirmed by the Board of Directors.