Disclosure Requirements – Investment Funds – Finland
Disclosure Category: 1
Clearstream Banking S.A. (“CBL”), as an authorised nominee in Finland, is under an obligation, on demand, to disclose the identity and holdings of customers and ultimate beneficial owners holding Finnish investment funds.
In order to comply with the local legislation, customers with holdings in Finnish investment funds or entering into transactions in the Finnish market must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CBL the required information to be disclosed. Customers who do not grant such authority cannot hold such investment funds / financial instruments in their accounts with CBL.
Background and legal basis
When holding Finnish investment fund units or shares, CBL is obliged to disclose the identity and holdings of customers and ultimate beneficial owners in the following cases:
- Disclosure requirements under the Act on Mutual Funds (Sijoitusrahastolaki), also known as the Act on Common Funds (48/1999, as amended);
- Tax reporting obligations set down in the Finnish Tax Assessment Procedure Act (1558/1995, as amended) and other Finnish tax legislation. Where CBL’s customers are subject to tax reporting obligations with the relevant tax authorities, they are required to proceed with the required reporting or contact CBL for assistance, where such service is offered by CBL.
- Obligation on CBL as a nominee to fulfil any tax reporting requirements to relevant tax authorities relating to the holdings of our customers and ultimate beneficial owners.
- AML Disclosure requirements: In order for the fund managers to satisfy their obligations, to the extent required by the local legislation relating to the fight against money laundering and the financing of terrorism, as well as Know Your Customer (KYC) requirements.
According to the terms and conditions stated in the nominee agreements that CBL, in its capacity as a nominee, had signed with the respective fund managers in compliance with Section 57 c of the Act on Mutual Funds, customers are advised that CBL as nominee is obliged to disclose information on CBL customers and/or the ultimate beneficial owners / the end clients behind the whole custody chain, to the fund managers upon request within the time stipulated. Such information includes but not limited to the following: full name, address (street address, city, and country), date of birth, tax identification number (TIN), and the number of units held for each of the fund unit series. For funds units sold or redeemed, information required includes but not limited to the following: full name, address, date of birth, tax identification number (TIN), the number of funds units redeemed, redemption date, redemption price and fees associated with redemption (if any), subscription date, subscription price and fees associated with subscription (if any).
Pursuant to Chapter 9 a of the Finnish Act on Mutual Funds,
Section 57 a – Units owned by a foreign (that is, non-Finnish) national or a foreign organisation or foundation may be entered in the unit register in the name of the nominee. A precondition for the registration of a unit under a nominee instead of the unit holder shall be the right of the fund manager to obtain information on the ultimate beneficial owner.
Section 57 c – The fund manager and the nominee must enter into a written contract that shall conclude that the nominee submits to the fund manager the information referred to in Section 53 relating to the respective unit holders, as well as other information required by the fund manager under the legislation on its operations.
Section 57 g – The Finnish Financial Supervisory Authority (FSA), prosecuting and pre-trial investigation authority and other authorities permitted by Finnish law may request the nominee to provide information such as, but not limited to, the name, home state and the number of units held by the unit holder. The FSA may, alternatively, require a written affirmation that the ultimate beneficial owner of the fund units is not Finnish.
Customers are required to inform CBL if they are the ultimate beneficial owner of these Finnish fund units or not. If they are not the ultimate beneficial owner, customers need to ensure that CBL, at all times, is allowed legal and practical access to information regarding the identity of the beneficial owner. Customers subject to provisions of confidentiality in their home country must obtain the necessary legal basis for disclosure through customer agreements (prior consent). In instances where there are multiple levels or intermediaries between CBL and the ultimate beneficial owner, customers must ensure that a legal basis exists requiring “customers at each level” to submit the identity of their respective clients upon request.
For Finnish funds subject to the Act on Mutual Funds, customers must affirm to CBL in writing that the ultimate beneficial owner is not Finnish and any other residency restrictions that the specific fund may impose.
Therefore, if a customer does not provide CBL with this legal and practical access to the required beneficial owner information, CBL may refuse the nominee assignment.
Failure to comply with the disclosure request from the fund managers, its agents, the regulators/authorities within the stipulated time frame may result in the blocking of holdings, freezing of accounts, or compulsory redemption of the fund units/shares imposed by the fund managers or regulators. CBL may not accept the nominee assignment and customers need to transfer the relevant holdings out of CBL. Non-compliance with the disclosure requirements may also result in fines, or the withdrawal of authorisation for CBL to act as a nominee.
The information contained in the Disclosure Requirements is based on the legal opinion obtained by CBL that was issued on 21 August 2018 and the nominee agreements entered into with the fund managers. CBL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CBL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and customers should seek advice from independent professional counsel.
Customers are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless CBL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CBL arising out of or resulting from such non-compliance.