National Risk Assessment of Money Laundering and Terrorist Financing in the NPO Sector 2024 Internal security | Publications of the Ministry of the Interior 2024:19 Sisäisen tu rvallisu u d en op etu sp eli | Publications of the M inistry of the Interior 2024:x Ministry of the Interior www.intermin.fi PO Box 26, FI-00023 Government National Risk Assessment of Money Laundering and Terrorist Financing in the NPO Sector 2024 Petri Siitonen NPO project group Ministry of the Interior Helsinki 2024 Publications of the Ministry of the Interior 2024:19 Ministry of the Interior CC BY-SA 4.0 ISBN pdf: 978-952-324-950-9 ISSN pdf: 2490-077X Layout: Government Administration Department, Publications Helsinki 2024 Finland Publication distribution Institutional Repository for the Government of Finland Valto julkaisut.valtioneuvosto.fi https://julkaisut.valtioneuvosto.fi/ Description sheet 31 October 2024 National Risk Assessment of Money Laundering and Terrorist Financing in the NPO Sector 2024 Publications of the Ministry of the Interior 2024:19 Subject Internal security Publisher Ministry of the Interior Author(s) Petri Siitonen Group author NPO project group Language English Pages 127 Abstract The National Risk Assessment of Money Laundering and Terrorist Financing in the NPO Sector 2024 was prepared by the NPO project group of the Ministry of the Interior. The risk assessment describes the threats, vulnerabilities and risks of money laundering and terrorist financing in all the operations of non-profit organisations (NPO sector). The risk assessment also examines the risks of money laundering and terrorist financing in relation to selected phenomena. Public authorities, supervisors in accordance with the Act on Preventing Money Laundering and Terrorist Financing, and NPOs of different sizes contributed to the preparation of the risk assessment in the NPO sector. In addition to the coordinating ministry, the NPO project working group included experts from the Ministry of Finance, the Ministry for Foreign Affairs, the Ministry of Economic Affairs and Employment, FIU Finland at the National Bureau of Investigation, the Finnish Security and Intelligence Service, the National Police Board and the Gambling Administration of the National Police Board, the Finnish Patent and Registration Office, the Tax Administration and the Grey Economy Information Unit under the Tax Administration. Keywords money laundering, terrorism, financial crimes, risks, risk assessment ISBN PDF 978-952-324-950-9 ISSN PDF 2490-077X Reference number - Project number VN/34756/22 URN address https://urn.fi/URN:ISBN:978-952-324-950-9 https://urn.fi/URN:ISBN:978-952-324-950-9 Kuvailulehti 31.10.2024 Kansallinen NPO-sektorin rahanpesun ja terrorismin rahoittamisen riskiarvio 2024 Sisäministeriön julkaisuja 2024:19 Teema Sisäinen turvallisuus Julkaisija Sisäministeriö Tekijä/t Petri Siitonen Yhteisötekijä NPO-hankkeen työryhmä Kieli englanti Sivumäärä 127 Tiivistelmä Kansallinen NPO-sektorin rahanpesun ja terrorismin rahoittamisen riskiarvio 2024 on laadittu sisäministeriön NPO-hankeryhmässä. Riskiarviossa kuvataan rahanpesun ja terrorismin rahoittamisen uhkia, haavoittuvuuksia ja riskejä voittoa tavoittelemattomien organisaatioiden (NPO-sektorin) toiminnassa. Lisäksi riskiarviossa tarkastellaan rahan pesun ja terrorismin rahoittamisen riskejä liittyen valittuihin ilmiöihin NPO-sektorilla. NPO-sektorin riskiarvioon osallistui viranomaistoimijoita, rahanpesulain mukaisia valvojia, sekä erikokoisia toimijoita NPO-sektorilta. NPO-hanketyöryhmään kuului koordinoivan ministeriön lisäksi valtiovaraniministeriön, ulkoministeriön, työ- ja elinkeinoministeriön, Keskusrikospoliisin rahanpesun selvittelykeskuksen, Suojelupoliisin, Poliisihallituksen sekä Poliisihallituksen Arpajaishallinnon, Patentti- ja rekisterihallituksen, Verohallinnon ja Verohallinnon alaisen harmaan talouden selvitysyksikön asiantuntijoita. Asiasanat rahanpesu, terrorismi, talousrikokset, riskinarviointi, riskit ISBN PDF 978-952-324-950-9 ISSN PDF 2490-077X Asianumero - Hankenumero VN/34756/22 Julkaisun osoite https://urn.fi/URN:ISBN:978-952-324-950-9 https://urn.fi/URN:ISBN:978-952-324-950-9 Presentationsblad 31.10.2024 Nationell riskbedömning av penningtvätt och finansiering av terrorism inom NPO-sektorn 2024 Inrikesministeriets publikationer 2024:19 Tema Inre säkerhet Utgivare Inrikesministeriet Författare Petri Siitonen Utarbetad av NPO-projektarbetsgruppen Språk engelska Sidantal 127 Referat Den nationella riskbedömningen av penningtvätt och finansiering av terrorism inom NPO-sektorn 2024 har utarbetats i inrikesministeriets NPO-projektgrupp. I riskbedömningen beskrivs hot, sårbarheter och risker beträffande penningtvätt och finansiering av terrorism i icke-vinstdrivande organisationers (NPO-sektorns) verksamhet. I riskbedömningen granskas dessutom risker förknippade med penningtvätt och finansiering av terrorism med anknytning till de utvalda fenomenen inom NPO-sektorn. I utarbetandet av NPO-sektorns riskbedömning deltog myndighetsaktörer, övervakare enligt penningtvättslagen samt aktörer av olika storlek inom NPO- sektorn. I NPO-projektarbetsgruppen ingick förutom det koordinerande ministeriet sakkunniga från finansministeriet, utrikesministeriet, arbets- och näringsministeriet, Centralkriminalpolisens central för utredning av penningtvätt, Skyddspolisen, Polisstyrelsen samt Polisstyrelsens Lotteriförvaltning, Patent- och registerstyrelsen, Skatteförvaltningen och Skatteförvaltningens enhet för utredning av grå ekonomi. Nyckelord penningtvätt, terrorism, ekonomiska brott, risker, riskbedömning ISBN PDF 978-952-324-950-9 ISSN PDF 2490-077X Ärendenummer - Projektnummer VN/34756/22 URN-adress https://urn.fi/URN:ISBN:978-952-324-950-9 https://urn.fi/URN:ISBN:978-952-324-950-9 Contents Abbreviations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1 General section.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.1 Abstract.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.2 Money laundering and terrorist finacing risk assessment and definitions.. . . . . . . . . . . . . 12 1.2.1 Purpose of the risk assessment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.2.2 Composition of risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 1.3 NPO risk assessment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.3.1 Purpose and background of the NPO risk assessment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.3.2 Structure of the NPO risk assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.3.3 Scope and limits of the NPO risk assessment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.4 Money laundering and terrorist financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1.4.1 Money laundering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1.4.2 Terrorist financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1.5 AML/CFT regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.5.1 Transnational entities and regulation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.5.2 National legislation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2 NPO Sector.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.1 Definition of an NPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.1.1 Definition of an NPO in an international context.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.1.2 Definition of an NPO in the national risk assessment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.2 Finland’s NPO sector and its operating environment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.2.1 Administrative environment, national regulation and freedom of association.. . . . . . . . . . . . . . . . . . . 30 2.2.2 Registered NPOs in Finland.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 2.2.3 Prohibition of association activities contrary to good practice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2.3 Classification of the Finnish NPO sector.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.3.1 Associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.3.2 Foundations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 2.3.3 Fundraising activities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 2.3.4 Humanitarian aid and development cooperation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 2.3.5 NPO survey.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3 Key themes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 3.1 Russia’s war of aggression against Ukraine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 3.1.1 Collections and donations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 3.2 Undesirable foreign funding.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3.2.1 Undesirable foreign funding as a definition.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3.2.2 Undesirable donations to associations and foundations in Finland.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 3.3 Public support (government grants). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 3.3.1 Public support for associations and foundations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 4 TF/ML threats in the NPO sector.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 4.1 TF threats in the NPO Sector.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 4.1.1 TF threats in fundraising activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.1.2 TF threats in humanitarian and development cooperation organisations.. . . . . . . . . . . . . . . . . . . . . . . . . 62 4.2 ML threats in the NPO Sector.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 5 TF/ML vulnerabilities in the NPO sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 5.1 TF vulnerabilities in the NPO sector.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 5.1.1 TF vulnerabilities in collection activities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 5.1.2 TF vulnerabilities in humanitarian and development cooperation organisations.. . . . . . . . . . . . . . . . 70 5.2 ML vulnerabilities in the NPO Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 6 Risks in the NPO sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 6.1 General risks for the entire NPO sector.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 6.2 Sub-sector specific risks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 6.2.1 Political associations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 6.2.2 Health and social services associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 6.2.3 Cultural associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 6.2.4 Leisure associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 6.2.5 Sports and exercise associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 6.2.6 Religious and ideological associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 6.2.7 Humanitarian and development cooperation associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 6.2.8 National defence and international relations associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 6.2.9 Unregistered associations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 6.2.10 Foundations.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 7 Summary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 7.1 General risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 7.2 Specific risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 7.3 Risk-based approach.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 References.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Annexes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Annex 1: Methodology.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 8 Publications of the Ministry of the Interior 2024:19 A B B R E V I AT I O N S Table 1.  Abbreviations AML Anti Money Laundering - CFT Combating the Financing of Terrorism - DNFBP Designated Non-Financial Business or Profession - FATF Financial Action Task Force OECD Intergovernmental Task Force on Money Laundering and Terrorist Financing FIU Financial Intelligence Unit A national unit tasked with the prevention, detection, examination and investigation of money laundering and terrorism financing. In Finland, it is the Financial Intelligence Unit (FIU Finland) at the National Bureau of Investigation. ML Money Laundering - NRA National Risk Assessment - NPO Non-profit Organisation - OECD The Organisation for Economic Co-operation and Development - SNRA Supranational Risk Assessment EU Commission Supranational Risk Assessment (SNRA) of money laundering and terrorist financing STR Suspicious Transaction Report Suspicious Activity Report – money laundering report TF Terrorist Financing - TFR Terrorist Financing Report - 9 Publications of the Ministry of the Interior 2024:19 1 General section Finland’s National Risk Assessment of Money Laundering and Terrorist Financing in the NPO Sector1 2024 is the first national risk assessment focused on the NPO sector alone. ‘NPO’ refers to non-profit organisations, and the NPO sector was part of and a separate sub-sector in the National Risk Assessment of Money Laundering and Terrorist Financing in 2021. In December 2022, the Ministry of the Interior launched the NPO project2 and made the decision to update the section on the NPO sector of the 2021 risk assessment by preparing an independent risk assessment for the NPO sector. The risk assessment was prepared under the coordination of the Ministry of the Interior and the risk assessment work was guided by the NPO project working group.3 1.1 Abstract The National Risk Assessment of Money Laundering and Terrorist Financing in the NPO Sector focuses on the operating environment of the sector, identifying the threats, vulnerabilities and risks of the sector, and assessing their level. The threats, vulnerabilities and risks in the NPO sector are examined in this package from the perspective of money laundering and terrorist financing (ML/TF). The Financial Action Task Force’s (FATF) country assessment for Finland also requires that the risks associated with the NPO sector be made a full part of the analysis.4 1 ‘NPO’ refers to a non-profit organisation or foundation. For more detail on the definition, see Section 2.1.2 of the risk assessment. 2 Decision of the Ministry of the Interior VN/34756/22. 3 In addition to the coordinating ministry, the working group included experts from the Ministry of Finance, the Ministry for Foreign Affairs, the Ministry of Economic Affairs and Employment, FIU Finland at the National Bureau of Investigation, the Finnish Security and Intelligence Service, the National Police Board and its Gambling Administration, the Finnish Patent and Registration Office, the Tax Administration and the Grey Economy Information Unit of the Tax Administration. 4 FATF MER 2019, p. 38. 10 Publications of the Ministry of the Interior 2024:19 The risk assessment of the NPO sector involved public authorities, supervisors in accordance with the Act on Preventing Money Laundering and Terrorist Financing (‘AML Act’), and operators of different sizes from the NPO sector. The risk assessment started with mapping the NPO sector, including the definition of NPO used in the national risk assessment and an analysis based on the feedback from the previous 2021 risk assessment. With the help of these aforementioned surveys, a new risk profile was drawn up for the Finnish NPO sector, defining the scope of the sector and the objectives of the risk assessment update. It also includes unregistered activities of associations, which were excluded from the previous risk assessment. After the preparation of the risk profile, threats and vulnerabilities to the NPO sector were mapped in a two-day workshop with the help of experts5, the first day of which was reserved for public authorities and the second for NPOs, mainly representatives of large associations and umbrella organisations. After that, a survey6 was sent to the NPOs for a self-assessment of their capabilities in terms of anti-money laundering and countering the financing of terrorism (AML/CFT). Based on the workshop days and the NPO survey, general and specific risks were outlined for the sub-sectors7 of the risk profile. The risks were assessed with the help of public authorities and the NPOs that contributed to the workshops and surveys, after which the results were analysed to compile the final risk levels. Key observations on the national NPO sector: y The Finnish NPO sector is very extensive: the Register of Associations holds 108,000 registered associations, and there are about 2,700 foundations in the Register of Foundations.8 y The definition of NPO in the national risk assessment emphasises the non-profit nature of the organisation as well as the acquisition or receipt of funds or other financial support in operation and/or the use or transmission of funds or other financial support for specific purposes for the public good. 5 The experts consisted of representatives of public authorities and supervisors in accordance with the AML Act. 6 For more information on the surveys conducted in the NPO sector, see Section 2.3.5. 7 For the classification of the NPO sector, see Section 2.3. 8 The data is based on the situation on 1 January 2024. 11 Publications of the Ministry of the Interior 2024:19 Key observations on threats and vulnerabilities associated with the national NPO sector: y The main threats to the NPO sector are estimated to be illegal international money transfers and other criminal actions in cross-border activities carried out by NPOs, as well as the infiltration of legal activities by criminals. y The main vulnerabilities affecting the NPO sector are considered to be legislative problems in the exchange of information between public authorities, shortcomings in the transparency of NPO activities and deficiencies in the internal processes of NPOs. Most significant risks in the NPO sector: y For religious and ideological associations, money transfer through unofficial channels to target countries, in particular the use of cash couriers, is considered a significant terrorist financing (TF) risk. y The risk associated with urgent humanitarian aid for emerging NPOs9 is estimated to be a significant TF risk. An urgent situation often arises around humanitarian aid, which creates pressure to reduce the means of risk management at the expense of the delivery of urgent aid, in which case the funds may end up in the hands of terrorists. y For unregistered associations, the blind spot of regulatory control was also considered a significant TF risk. The activities of an unregistered association may be ideologically or operationally aligned to directly support terrorist activities or engage in money laundering. Due to the unregistered nature of the activities, public authorities or other entities lack a window into the activities of the association. However, it should be noted that an unregistered association is not a legal person and does not have the criminal liability of a legal person. All contracts and any criminal liability related to the association’s activities apply only to private persons who have concluded a contract or committed a punishable act. In addition, the significant risk does not apply to the activities of unregistered associations as a whole but to certain unregistered associations selected through a risk-based assessment. 9 For a more detailed definition, see Section 2.3.1. Associations focused on humanitarian aid and development cooperation 12 Publications of the Ministry of the Interior 2024:19 The risks arising from the combination of threats and vulnerabilities in the NPO sector were formed on the basis of assessments by expert and NPOs. The experts and NPOs consulted ranked the threats and vulnerabilities on a scale of 1 to 4 (from Lowly significant to Very significant). The risk level was obtained from a combination of threat and vulnerability levels with a 50/50 distribution. The distribution of responses seems weighted in favour of large and aware organisations at the expense of smaller ones, but there were, in general, many responses.10 The calculation of the significance of the risks was done by assessing each risk in terms of its probability and severity. Risk scores were calculated by multiplying the mean values of the given estimates (probability times severity). The estimates of public authorities and the NPO sector were weighted equally (50/50) despite the higher response rates of the NPO sector. The assessment by the public authorities in the working group was found comprehensive as it involved a sufficiently large sample of public authorities, including experts who, by virtue of their positions, have an objective and wide- ranging view of the supervision of the NPO sector, and the phenomena, resources and legislation of ML/TF, which forms the framework for AML/CFT activities in the NPO sector. 1.2 Money laundering and terrorist finacing risk assessment and definitions 1.2.1 Purpose of the risk assessment The Act on Preventing Money Laundering and Terrorist Financing (444/2017, ‘AML Act’) obliges national authorities to prepare a national risk assessment of money laundering and terrorist financing. The national risk assessment identifies and assesses ML/TF risks in different sectors in Finland and contributes to strengthening the risk-based approach, developing AML/CFT supervision and activities, and allocating resources in an efficient manner. 10 For the NPO survey, see Section 2.3.5. 13 Publications of the Ministry of the Interior 2024:19 The risk assessment must take into account the European Commission’s Supranational Risk Assessment (SNRA) of the risk of money laundering and terrorist financing.11 According to the AML Act, one purpose of the risk assessment is to support the competent supervisory authorities, the Finnish Bar Association and the obliged entities in the preparation of their own risk assessments. According to the European Commission, the SNRA, Member States’ national risk assessments and sector-specific risk assessments are equally relevant and complementary.12 The national risk assessment must be updated regularly.13 Finland’s national risk assessment is updated at least every four years, subject to national or international obligations. The risk assessment update cycle is not defined by the FATF. After identifying risks and determining the level of risk, AML/CFT measures should be applied in ways that are proportionate to the risks identified. The FATF and the EU Commission require action to reduce risks14, and these actions are reflected in an action plan15 drawn up on the basis of the results of the national risk assessment. The action plan highlights at national level how to respond to the risks identified, that is, what measures will be implemented in response to them. Above all, the action plan explores targeted legislative and operational measures to reduce the risks identified. The action plan may also include measures that derive from new requirements of the FATF or the Commission or that are considered necessary for AML/CFT. 11 Article 7 of the Directive on Anti-Money Laundering and Terrorist Financing, Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (AMLD IV) require Member States to make use of the results of the SNRA when carrying out national risk assessment measures. 12 EU SNRA 2022 – Commission Staff Working Document, p. 5. 13 Article 7 of AMLD IV (2015/849) requires Member States to keep their national risk assessment up to date. 14 FATF 2012–2023, p. 8. 15 No separate action plan will be drawn up on the basis of this risk assessment, but its results will be taken into account when preparing the next national action plan. The current action plan is valid in the period 2024–2025 and covers the NPO sector. 14 Publications of the Ministry of the Interior 2024:19 1.2.2 Composition of risk ML/TF risk refers to a combination of threat, vulnerability and consequence. As defined by the FATF: y Threat means a person or group of people, object or activity with the potential to cause harm to, for example, the state, society or the economy. In the ML/TF context, this includes criminals, terrorist groups, their funds and facilitators. ML predicate offences can be considered a threat. The threat typically serves as a key starting point for developing an understanding of ML/TF risk.16 y Vulnerabilities are things that can be exploited by threats or that may support or facilitate threats. In the ML/TF risk assessment context, looking at vulnerabilities as distinct from threat means focusing on, for example, the factors that represent weaknesses in AML/CFT systems or controls or certain features of a country. Vulnerabilities may also include the features of a particular sector, financial product or type of service that make them attractive for ML/TF purposes.17 y Consequence means the impact or harm that ML/TF may cause, which includes the effect of the underlying criminal and terrorist activity on financial systems and institutions, as well as the economy and society more generally. The consequences of ML or TF may be short or long term in nature.18 Risk can be defined as a concrete operating model or method, such as the transport of cash across borders. A risk may also be a specific, concrete factor, such as a geographical location or factors related to technological development. However, in some cases, the risks presented in Finland’s national risk assessment may focus more on vulnerabilities or threats. According to the FATF, given the challenges in determining or estimating the consequences of ML/TF, it is accepted that countries may opt to focus primarily on achieving a comprehensive understanding of their threats and vulnerabilities. What is key for consequences is that the risk assessment adopts an approach that covers measures to mitigate the risks.19 This is also the approach decided for this 16 FATF 2012–2023, p. 7. 17 FATF 2012–2023, p. 7. 18 FATF 2012–2023, pp. 7–8. 19 FATF 2012–2023, pp. 8–9. 15 Publications of the Ministry of the Interior 2024:19 national NPO sector risk assessment. The rationale for the approach selected is that, as a rule, ML/TF has serious economic and social consequences, and ML/TF activities produce continuous, significant negative effects on the trustworthiness, integrity and stability of credit and financial institutions, as well as on the credibility of the financial system as a whole. 1.3 NPO risk assessment 1.3.1 Purpose and background of the NPO risk assessment The purpose of the risk assessment is to examine Finland’s NPO operating environment and to identify and assess threats, vulnerabilities and risks related to the NPO sector. This is the second20 national mapping of the risks of money laundering and terrorist financing in the NPO sector. In the context of the FATF, the requirement of knowledge of the NPO sector is linked to Recommendation 8, which requires both a more general review of the NPO sector and the identification of the risks inherent in the sector.21 In addition to the FATF recommendations, the EU SNRA recommends conducting national NPO examinations in order to identify the characteristics and risks of NPOs in the ML/TF context. According to the 2022 SNRA, the NPO sector is one area where particular attention should be paid in national risk assessments22. In addition, the SNRA provides Member States with specific recommendations for action23 in relation to the NPO sector: y Member States should ensure that non-profit organisations are more involved in national risk assessments, in particular as regards the potential of financial institutions to reduce risks. y Member States should implement information and awareness-raising programmes on NPOs’ risk of being abused and provide them with material to raise awareness. 20 The NPO sector was previously a sub-sector of the 2021 National Risk Assessment of Money Laundering and Terrorist Financing. 21 FATF 2012–2023, p. 43. 22 EU SNRA 2022, pp. 18–19. 23 EU SNRA 2022, Report from the Commission to the European Parliament and the Council, p. 26. 16 Publications of the Ministry of the Interior 2024:19 The EU-level requirements and the FATF Recommendations on knowledge of the NPO sector and risk assessment are in many respects congruent, but with slight differences in focus. In terms of the NPO sector, the FATF specifically focuses on NPOs that are at risk of exploitation through terrorist financing24, while the SNRA covers the risks in the NPO sector from the perspective of both ML and TF. However, the SNRA found that a separate ML assessment of the threats and vulnerabilities of the NPO sector is not useful, and instead they can be examined in the same context as threats and vulnerabilities associated with TF.25 This risk assessment identifies the possibility for NPOs to connect to both perspectives, but the focus is on assessing the threats and vulnerabilities associated with TF, following the lead of the FATF. The need to prepare a separate NPO risk assessment can be justified not only by the general requirements of the FATF and the EU regarding the NPO sector, but also by the observations of the FATF country assessment for Finland. According to the country assessment, threats to the NPO sector and related TF risks have previously only been identified to a limited extent in Finland, which also has an impact on risk-based surveillance and monitoring measures.26 The preparation of this risk assessment was guided by observations contained in the country assessment on the national risk understanding of the NPO sector and the feedback received from the previous 2021 risk assessment. However, the methodology used in this risk assessment differs from the methodology used in the 2023 partial update of the National Risk Assessment of Money Laundering and Terrorist Financing. Due to the diversity and scope of the sector, the risk assessment does not establish overall risk levels for the entire NPO sector or the sub-sectors. This decision was reached with good reason, especially due to the characteristics and structure of the Finnish NPO sector. The project group considered that the overall risk level does not provide a correct and risk-based overall picture of the ML/TF risks in the sector as a whole in a way that would not unnecessarily label low-risk or risk-free NPOs under the same overall risk.27 The FATF margin of discretion that allows each country to decide how to assess risks was leveraged in this.28 In addition, the FATF does not allow NPOs to be treated as obliged entities, so it is justified to deviate 24 FATF 2012–2023, p. 43. 25 EU SNRA 2022 – Commission Staff Working Document, p. 240–244. 26 FATF MER 2019, p. 174. 27 FATF BPP 2023, p. 13. 28 FATF BPP 2023, p. 12. 17 Publications of the Ministry of the Interior 2024:19 from the methodology used for risk assessment of obliged entities under the AML Act. General risks were formed to describe the most common and topical ML/TF risks for the entire sector. Specific risks were created for certain sub-sectors due to the nature of the activity, and specific risks take precedence over general risks. The general risks should not be used in such a way that an overall risk level is established for the whole sector using the general risks. The specific risks should also not be used to form the overall risks per sub-sector. 1.3.2 Structure of the NPO risk assessment This NPO sector risk assessment consists of seven sections. The first, general section describes the national and international framework of risk assessment, guiding laws and documents, the formation of risk and the purpose of the risk assessment. The second section deals with the NPO29 sector in the Finnish framework, while the third section discusses current phenomena, The fourth section covers ML/TF risks from the perspective of threats and the fifth from the perspective of vulnerabilities. The sixth section deals with general and specific risks, and the seventh section includes a summary. The annex at the end of the risk assessment contains the methodology used in this risk assessment. 1.3.3 Scope and limits of the NPO risk assessment This NPO sector risk assessment focuses on registered operators and, unlike the previous risk assessment, also on the activities of unregistered associations, although unregistered associations are not legally competent. The lack of quantitative data on unregistered NPOs is problematic for analysis, but the views and experiences of various public authorities on the challenges related to supervising unregistered NPOs were used here. The only other country to use the Finnish model for regulating association activities is Germany, where the provisions on registered and unregistered associations are included in a civil code more than 120 years old (Bürgerliches Gesetzbuch).30 There are some similarities between Estonian legislation on associations and the Finnish Associations Act, such as registration as a precondition for achieving 29 NPO refers to non-profit organisations. For more detail on the definition, see Section 2.3 of the risk assessment. 30 Government proposal HE 200/2022 vp, p. 17–18. 18 Publications of the Ministry of the Interior 2024:19 legal personality. The other Nordic countries either do not regulate associations at the level of acts or their regulation is targeted at the activities themselves, as in the UK, instead of the community form. Therefore, the exclusion of unregistered activities of associations is not justified solely on the basis that information related to registration alone is not available. It was considered necessary to carry out a risk assessment for unregistered associations despite the fact that they do not have legal competence. Finnish legislation does not recognise an obligation to register, but legal personality can only be achieved by registering the association. The sections on NPO-sector threats and vulnerabilities (Sections 4 and 5) look at fundraising activities and NPOs providing humanitarian aid and development cooperation31. In addition to being non-profit, fundraising is another essential common factor of NPOs based on the FATF definition, which justifies focusing the assessment on entities that meet these conditions. In turn, by the very nature of their activities, humanitarian aid and development organisations are potential targets for abuse from the point of view of terrorist financing, as aid organisations often operate in conflict areas or in areas where the presence of terrorist organisations has also been recognised,32 as well as in areas with inadequate AML/CFT frameworks. In addition, the risk assessment contains another NPO section (Section 6), which examines the risks of the entire sector and certain sub-sectors. 1.4 Money laundering and terrorist financing 1.4.1 Money laundering Money laundering (ML) refers to activities in accordance with chapter 32(6) of the Criminal Code (39/1889), where the aim is to convey funds acquired through the legal payment system in order to disguise or obfuscate the actual nature, origin or owners of the funds. ML requires a predicate offence of financial gain. Predicate offences may include, for example, drug offences, fraud, bribery or other financial crimes that help to raise illicit funds. These predicate offences generate income for criminals, which they then seek to cover up or legalise through ML. 31 The same applies to funds allocated as general grants to non-governmental activities related to Finland’s foreign and security policy guidelines and for international commitments. 32 EU SNRA 2022 – Commission Staff Working Document, pp. 238–239. 19 Publications of the Ministry of the Interior 2024:19 Figure 1.  Structure of money laundering. Money laundering consists of three distinct stages: placement, layering and integration. In the first stage, illegal profits are introduced, or placed, into the financial system. In the second stage, the funds are converted or moved around several times (layered) to distance them from their source, and in the third stage, the laundered proceeds of crime re-enter the legal market. The above steps may also occur concurrently.33 33 FATF: “What is Money Laundering?”, cited on 23 May 2024. - Property obtained through an offence, - proceeds of crime, or property replacing these is - received, - used, - converted, - conveyed, - transferred, - transmitted, or - possessed - the true nature, source, location or disposition of, or rights with respect to, property is concealed or obfuscated, or - another person is assisted in such concealment or obfuscation. The activities - benefit the offender or others, - cover or obfuscate the illicit origin of the proceeds or property, - help the offender to avoid legal consequences. 20 Publications of the Ministry of the Interior 2024:19 According to the FATF, it is impossible to accurately estimate how much money is laundered per year.34 However, the United Nations Office on Drugs and Crime (UNODC)35, for example, estimates that about 2–5% of the global GDP is laundered annually.36 If the phenomenon is assumed to be as extensive as in the rest of the world, the assets subject to money laundering in Finland amount to approximately EUR 5–12 billion37 annually. Self-laundering Self-laundering is the laundering of money from the proceeds of one’s own crime or property. In December 2020, additions required by the EU Directive on combating money laundering by criminal law38 were made to the Criminal Code. They made disguising the proceeds of crime more widely punishable. If a person who has committed a predicate offence enters into special arrangements to conceal the proceeds of and assets deriving from the offence, he or she may also be punished for money laundering in addition to the predicate offence.39 1.4.2 Terrorist financing Terrorist financing (TF) means the provision or collection of funds, directly or indirectly, for terrorist activities. Funding a terrorist group or an individual terrorist is punishable, as is attempting to do so. The source of funds may be legal or illegal – it does not matter. Terrorist financing is defined in chapter 34a(5) of the Criminal Code and is considered to include the financing of terrorist acts or their preparation, as well as other financial support for terrorist activities or a terrorist group and the promotion of terrorist activities. 34 FATF: “What is Money Laundering?”, cited on 18 June 2024. 35 The United Nations Office of Drugs and Crime, UNODC. 36 UNODC: Money-Laundering and Globalization, cited on 8 August 2024. 37 More detailed statistics on ML pre-trial investigations and convictions in Finland can be found in the 2023 partial update of the national risk assessment, Section 2. 38 Directive (EU) 2018/1673 of the European Parliament and of the Council on combating money laundering by criminal law. 39 Moneylaundering.fi 2024: Rahanpesusäännöksiä täydennetään rikoslaissa (“Anti-money laundering provisions supplemented in Criminal Code”), cited on 18 August 2023. 21 Publications of the Ministry of the Interior 2024:19 The stages of TF are raising, moving and using funds.40 In Finland, it has been observed that terrorism is mainly financed with funds from legal sources, and the money is moved using bank transfers, cash or money remittance services. Money transfers take place between several different countries.41 In order to combat terrorism and prevent the financing of terrorism, a natural or legal person may be subject to a freezing of assets as provided for in the Act on the Freezing of Funds with a View to Combating Terrorism (325/2013). In Finland, the National Bureau of Investigation makes decisions on freezing assets and maintains a public list of such decisions. Decisions to freeze assets are enforced by a bailiff. In order to combat terrorism and prevent terrorist financing, sanctions are also imposed, which in practice mean restrictions on financial or other cooperation with specified entities. Sanctions are aimed at influencing activities that are considered to be a threat, for example to security. In the fight against terrorism, sanctions may include financial sanctions aimed at freezing assets. The Ministry for Foreign Affairs lists sanctions against, among other things, terrorism on its website.42 As a rule, the Prosecutor General decides on the initiation of pre-trial investigations into the financing of terrorism. The Prosecutor General’s order for prosecution is required when the crime was committed abroad. If the suspected crime took place in Finland, the police would decide on the opening of a pre-trial investigation. In total, three pre-trial investigations have been launched into the financing of terrorism in Finland. Terrorist financing has been tried in court once, but the charges were dismissed by the Court of Appeal in March 2016.43 By 2024, no final convictions had been issued in Finland for the financing of terrorism. 40 FATF 2012–2023, p. 8. 41 FIU Finland 2023, p. 19. 42 Ministry for Foreign Affairs: Sanctions against terrorism, cited on 18 June 2024. 43 Helsinki Court of Appeal 23 March 2016, no. 16/111925. 22 Publications of the Ministry of the Interior 2024:19 1.5 AML/CFT regulation 1.5.1 Transnational entities and regulation International recommendations and guidelines define, for their part, AML/CFT activities. Finland is bound by national laws and EU legislation. In addition, the EU’s SNRA and its results should be leveraged when carrying out national risk assessment measures. While the FATF Guidance and Recommendations are not binding on the Member States in the sense of international law, the Member States are politically committed to implementing them at national level. Other bodies involved in AML/CFT are the UN and its Security Council, the Council of Europe, the Egmont Group of Financial Intelligence Units, and the Interpol and Europol from a law enforcement perspective. In addition to fighting illicit drugs and international crime, the UNODC also operates an international AML programme.44 The UN Security Council has, in several of its resolutions, imposed sanctions on terrorist organisations and individuals and groups associated with them, and it maintains a public sanctions list. In the European Union, terrorist sanctions imposed by the UN Security Council are implemented through legislation at EU level. The EU also has its own autonomous system of terrorist sanctions, meaning decisions on restrictive measures that are not based on Security Council resolutions. Sanctions against terrorism are regulated by EU Council decisions and regulations. Council Regulations are directly applicable in all Member States and are binding on both public authorities and private operators in those countries. The EU also maintains a public list of natural and legal persons, groups and entities subject to restrictive measures in connection with terrorism, that is, the freezing of funds and economic resources owned, held or controlled by them, and the direct or indirect making available of any funds or economic resources to or for the benefit of these entities. FATF The Intergovernmental Task Force on Money Laundering and Terrorist Financing (FATF), coordinated by the Organisation for Economic Co-operation and Development (OECD), conducts international AML/CFT cooperation, develops and issues AML/CFT recommendations, and monitors their implementation in the Member States. The FATF strives to promote the effective implementation 44 The Global Programme against Money Laundering, UNGPML. http://www.unodc.org/unodc/en/money_laundering.html 23 Publications of the Ministry of the Interior 2024:19 of regulatory and operational measures to combat money laundering, terrorist financing, proliferation of weapons of mass destruction and other international financial market threats. The FATF’s 40 Recommendations serve as guidelines for countries to develop their own AML, CFT and non-proliferation policies by applying the guidance to their different legal and administrative frameworks and financial systems. The recommendations aim to set international standards and improve AML/CFT systems.45 The FATF requires a risk-based approach to AML/CFT activities, as defined in Recommendation 1 (Assessing risks and applying a risk-based approach). It requires Member States to carry out a national risk assessment and to adopt a risk- based approach based on the results of the assessment in order to reduce risks. Recommendation 1 also requires different national entities, such as financial institutions, to carry out their own risk assessments.46 Recommendation 8 (Non- profit organisations) explicitly addresses the NPO sector and its specificities. In 2023, the FATF also published a best practices guide47 for assessing TF risks in the NPO sector. The guide was also used to support this National Risk Assessment of Money Laundering and Terrorist Financing in the NPO sector. European Commission supranational risk assessment The EU published its latest, third supranational risk assessment (SNRA) in 2022. Among other things, it identified products and services that may facilitate ML/TF, and recommended Member States to identify potential fields or areas of higher and lower risk in their national risk assessments. The SNRA provides Member States with recommendations to reduce ML/TF risks, and its results should be taken into account when preparing the national risk assessment. The latest SNRA also considered the NPO sector as a separate entity. 45 FATF 2012–2023, p. 7. 46 FATF 2012–2023, p. 10. 47 FATF: Best Practices on Combating the Abuse of Non-Profit Organisations. Available at: https://www.fatf-gafi.org/en/publications/Financialinclusionandnpoissues/Bpp- combating-abuse-npo.html, cited on 1 August 2024. https://www.fatf-gafi.org/en/publications/Financialinclusionandnpoissues/Bpp-combating-abuse-npo.html https://www.fatf-gafi.org/en/publications/Financialinclusionandnpoissues/Bpp-combating-abuse-npo.html 24 Publications of the Ministry of the Interior 2024:19 Supranational regulation AML/CFT activities are regulated at EU level by two AML directives. The aim of the AMLD IV48 is to prevent the use of the EU’s financial system for money laundering and terrorist financing. The main regulatory entities of the directive are the risk-based approach, customer due diligence, identification and registration of beneficial ownership information and notification obligations. In addition to individual amendments to the previous directive in the series, the AMLD V49 also introduced new regulation, which, inter alia, extended the scope of the directives to virtual currency providers and obliged Member States to set up a bank and payment account monitoring system. In addition, the AMLD VI50 has already been adopted at EU level, but it has not yet been implemented in Finnish legislation. However, a project51 for its implementation was launched at the Ministry of Finance in spring 2024. Prevention of money laundering is also regulated by Regulation (EU) 2015/847 on information accompanying transfers of funds52. The regulation applies to information on the payer and payees that must accompany transfers of funds in any currency in order to prevent, detect and investigate ML and TF. The applicability of the regulation for the transfer of funds requires that at least one of the payment service providers involved in the transfer of funds is established in the EU. National regulation on countering the financing of terrorism is also based on international obligations, the most significant of which is the UN’s International Convention on the Suppression of the Financing of Terrorism (Treaty Series 48 Directive (EU) 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC. 49 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU. 50 Directive (EU) 2024/1640 of the European Parliament and of the Council of 31 May 2024 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Directive(EU) 2019/1937, and amending and repealing Directive (EU) 2015/849. 51 Ministry of Finance project VN/9394/2024. See Section 1.5.2. 52 Regulation (EU) 2015/847 of the European Parliament and of the Council on information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006. 25 Publications of the Ministry of the Interior 2024:19 74/2002). National CFT regulation has also been affected by UN Security Council Resolution 1373 (2001) on measures to counter terrorism and terrorist financing. Finland also acceded to the Council of Europe Convention on the Prevention of Terrorism adopted in 2005 (Treaty Series 48–49/2008) and the Additional Protocol to the Convention, in particular on the phenomenon of foreign fighters (Treaty Series 49–50/2023). 1.5.2 National legislation National AML/CFT regulation is based on the EU directives and the FATF Recommendations. From an administrative point of view, the AML Act and the Act on the Financial Intelligence Unit, in particular, can be seen as preventive regulation, while the essential elements of ML/TF listed in the Criminal Code focus on the ex post evaluation of activities. The AML Act that entered into force in 2017 repealed the previous AML Act that entered into force in 2008. The objectives of the AML Act are to prevent ML/TF, to promote their detection and investigation, and to reinforce the tracing and recovery of the proceeds of crime. The 2017 AML Act nationally implemented the AMLD IV and the Regulation 2015/847 on information accompanying transfers of funds. The AMLD V, in turn, was implemented nationally through the Act on the Bank and Payment Account Monitoring System (571/2019), the Act on Virtual Currency Providers (572/2019) and individual amendments to the AML Act.53 Compared to the previous AML Act, the main provisions of the current AML Act are risk assessments, a register of beneficial owners, and the regulation of authority supervision and cooperation with public authorities. In addition, the AML Act regulates the ML supervision register. However, the new EU regulation imposes a need for changes to national AML/ CFT regulation. On 10 May 2024, the Ministry of Finance launched a project for a comprehensive reform of the AML Act54. The project group is to prepare a proposal for the legislative amendments and supplements needed to reform AML/CFT regulation, as well as to implement the new EU regulations on AML/CFT, that is, the Anti-Money Laundering and Terrorist Financing Regulation (AMLR), the AMLD VI, the Regulation establishing the Authority for Anti-Money Laundering 53 Government proposal HE 167/2018 vp, p. 1. 54 Ministry of Finance project VN/9394/2024. 26 Publications of the Ministry of the Interior 2024:19 and Countering the Financing of Terrorism (AMLA)55, and the amendment of the directive laying down rules facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences. The project will run until 30 June 2025. The AMLD VI and the AMLR will be applied or transposed into national law mainly from 10 July 2027, and the AMLA Regulation will be applied mainly from 1 July 2025. The Act on the Financial Intelligence Unit (445/2017) regulates the operations of FIU Finland and the register on the prevention, detection and investigation of ML/ TF, as well as the processing and confidentiality of register data. The provisions concerning FIU Finland were part of the AML Act prior to the comprehensive reform of the AML Act in 2017. The separation of the act from the AML Act is justified by the functionally independent status of FIU Finland as a unit of the police, which is partly subject to police legislation and different data protection regulation from obliged entities and supervisors.56 The regulation of terrorist financing is centralised in chapter 34a of the Criminal Code. In addition, an Act on the Freezing of Funds with a View to Combating Terrorism (325/2013) has been enacted to implement the obligations set out in UN Resolution 1373 (2001). The act regulates the administrative freezing of assets and applies to the assets of a legal or natural person who is suspected of having committed, for whom a punishment is required or who has been convicted of a terrorist offence in accordance with chapter 34a of the Criminal Code. 55 Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). The EU has set up a dedicated anti-money laundering authority, AMLA, to enhance the functioning of the EU’s AML/CFT framework. AMLA’s tasks include promoting the harmonisation and coordination of supervisory practices in the financial and non-financial sectors, direct supervision of high-risk and cross-border financial entities, and coordination of financial intelligence units. AMLA is based in Frankfurt, Germany and will officially start operating in 2025. 56 Government proposal HE 228/2016 vp, p. 1. 27 Publications of the Ministry of the Interior 2024:19 2 NPO Sector 2.1 Definition of an NPO 2.1.1 Definition of an NPO in an international context The FATF defines an NPO as follows: “A legal person or arrangement or organisation that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of ‘good works.’”57 The FATF’s definition identifies the purpose of raising and disbursing funds as well as the non-profit nature of the activity as key elements of an NPO. The FATF’s definition is operational, meaning it is based on the actual operations and characteristics of NPOs that may expose the entity to TF risk. In this case, decisive importance should not be put solely on the fact that the NPO operates on a not- for-profit basis.58 The FATF’s definition of an NPO can, through its emphasis on operations, be considered to provide a margin of discretion for creating a national NPO definition, as the nature of their operations must be taken into account when considering national NPOs. It is therefore not appropriate for the national definition of an NPO to be directly synonymous with the FATF’s definition.59 The terminological understanding of an NPO in the SNRA is also based on the FATF’s definition.60 FATF Recommendation 8 is limited to NPOs that focus on service provision (service NPOs), while the SNRA covers not only these but also NPOs related to self-expression and other leisure activities (expressive NPOs).61 Finland’s national NPO risk assessment, similarly to the SNRA, covers both types of NPOs. Identifying and understanding the characteristics of the field of operation of NPOs is, according to the FATF, an absolute prerequisite for achieving an 57 FATF 2012–2023, p. 43. 58 FATF 2012–2023, pp. 44–45. 59 FATF 2012–2023, pp. 44–45. 60 EU SNRA 2022 – Commission Staff Working Document, p. 238. 61 EU SNRA 2022, p. 238. 28 Publications of the Ministry of the Interior 2024:19 understanding of the risks of the NPO sector.62 This is the most effective way to identify the riskiest NPOs at national level and, based on the evaluation, to target actions under the action plan efficiently and effectively. The FATF also requires each country to identify NPOs that can be classified under the FATF’s operational definition and to distinguish them from NPOs that do not fall under the definition.63 Different countries have very different NPOs with different legal statuses. According to the legislation of the country in question, they may also conduct business very freely, without having active charitable work at the core of their activities, as it often is in Finland. The FATF gives examples of NPOs that do not fall under its operational definition: These include trade unions and organisations that primarily conduct research and/or support changes to public order but do not raise or pay funds to civic organisations. In Finland, two sub-sectors64 that do not fall within this definition can be distinguished from the operational definition: y political associations; and y professional and business associations. A political association is an organisation that primarily seeks to influence social matters in the main, rather than through charitable work. The main activity of professional and trade unions, on the other hand, is to represent their members and to promote their interests. This risk assessment takes that into account; however, these sub-sectors have been assessed in the same way in terms of ML/ TF risks as other sub-sectors, as they do not, for example, have a different legal personality status from other sub-sectors and are established public interest/non- profit organisations in Finland. In other sub-sectors, operational features can also be found that may not strictly fall within the scope of the FATF’s definition, but the main emphasis in the classification was on the FATF’s examples of the given entities, and there is no reason to extend it further in this risk assessment. However, despite the observations of the FATF’s definition of an NPO, political associations and professional/trade unions are still included in the Finnish definition of an NPO in this risk assessment, as was done in the previous risk assessment. 62 FATF 2012–2023, p. 44. 63 FATF BPP 2023, p. 10. 64 For the sub-sector breakdown, see Section 2.3. 29 Publications of the Ministry of the Interior 2024:19 2.1.2 Definition of an NPO in the national risk assessment The definition of an NPO used in the national risk assessment is based on the FATF’s definition and also takes into account the observations of the SNRA on the FATF’s definition of an NPO. This risk assessment defines an NPO as follows: “NPOs are legal persons, groups and groupings that primarily operate on a non-profit basis. An entity engaged in profit-driven activities may also be an NPO if its activities are partially on a non-profit basis. An NPO raises, receives and/or disburses or relays funds or other economic support for charitable, religious, educational, social, fraternal or ideological purposes or for other types of charity, or for sports, leisure-related, artistic, cultural or advocacy activities. Most NPOs operate as non-profit associations, foundations, federations, political parties or other organisations.” The terminology concerning the Finnish NPO sector is diverse, as in addition to non- profit activities, the same thing is also referred to by the terms “third sector,”65 “civil society,” “non-governmental organisations” and “voluntary civic activities.”66 Part of the activities of the NPO sector can be examined from the perspective of “public good”, which emphasises the legal perspective.67 According to section 2 of the Money Collection Act, for example, non-profit activities mean activities for a general social, cultural or ideological purpose or some other general non-governmental activities. Nowadays, the informal concept of the “fourth sector” has also been used in some contexts to refer to the non-organised part of civil society. Taxation also takes a position on charity status, but the definition used therein differs, for example, from the definition of non-profit activities in the Money Collection Act. Section 22 of the Income Tax Act defines a non-profit organisation as one that acts exclusively and directly for the public good in the material, intellectual, moral or social sense. In addition, its activities do not only target a limited circle of persons and it does not create an economic advantage for those involved in its activities. It should be noted that the definition of non-profit used in the context of taxes is not intended to be used in a broader context. 65 Virén 2014, p. 9. 66 University of Jyväskylä, Kansalaisyhteiskunnan tutkimusportaali (Civil Society Research Portal): Third sector, cited on 18 June 2024. 67 Virén 2014, p. 9. 30 Publications of the Ministry of the Interior 2024:19 2.2 Finland’s NPO sector and its operating environment 2.2.1 Administrative environment, national regulation and freedom of association Freedom of association According to section 13 of the Constitution of Finland (731/1999), everyone has the freedom of association, which entails the right to form an association without a permit, to be a member or not to be a member of an association and to participate in the activities of an association. The freedom of association enacted is a fundamental universal right, which also includes the right to act in the form of unregistered associations. The provision on the freedom of association requires that the establishment of associations must not be subject to a permit, and the registration procedure of associations must not become such that it actually prevents the exercise of the freedom of association. Freedom of association is also a human right enshrined in Article 11 of the European Convention on Human Rights68 (ECHR): “Everyone has the right to freedom of peaceful assembly and to freedom of association with others at all levels, in particular in political, social and association activities, including the right to form and to join trade unions for the protection of their interests.” Freedom of association consists of four areas: the right of establishment, the right of membership, the right to not be a member and the right of participation. This means that the provision on fundamental rights guarantees both positive and negative freedom of association.69 An association may always be registered when the conditions laid down in law are met. On the other hand, freedom of association also includes the right to act as an association without registration.70 However, fundamental rights are not so absolute that they could not be restricted under certain circumstances and to a certain extent. According to chapter 13(3) of the Constitution, more detailed provisions on the exercise of the freedom of association are laid down by law, that is, under the ordinary legislative procedure. This in itself does not justify interference with the fundamental right to freedom of association; that requires a constitutional procedure. When 68 Finnish Treaty Series 63/1999 69 Muukkonen 2012, p. 43. 70 Government proposal HE 309/1993 vp, p. 60. 31 Publications of the Ministry of the Interior 2024:19 assessing what kind of interference with the freedom of association requires the constitutional procedure and when it is only a question of organising the exercise of freedom of association by law, the list of general criteria for the restriction of fundamental rights contained in the report of the Constitutional Law Committee on the reform of fundamental rights can be used as an aid71; once the aforementioned requirements are met, the fundamental right can be interfered with by ordinary law. In order to be considered legitimate, interference with the freedom of association must have a legitimate purpose and be based on law, and the interference must be necessary in a democratic society. The legality of the interference means that there must be a legal basis for it in national law. In addition, that law must be available and sufficiently precise in its form so that individuals can anticipate the consequences of their actions and thereby regulate their behaviour. The legitimate objectives of intervention have been considered to be, inter alia, national security or public safety, the prevention of disorder or crime, the protection of health or morals or the protection of the rights and freedoms of others (European Convention of Human Rights, Article 11(2)). Restrictions on the freedom of association under the Associations Act are mainly made to ensure public order and safety. These include the total prohibition of associations organised in a military manner (Associations Act, section 3) and the establishment of shooting associations being subject to a permit (Associations Act, section 4). The restrictions have been deemed to possible to hand down under the ordinary legislative procedure mainly on the grounds that the protection of the Constitution cannot be enjoyed by activities endangering public order and safety. In addition, the international human rights conventions binding on Finland justify such restrictions. On the other hand, the freedom of association also includes protection against unjustified termination, according to which the activities of the association may continue without hindrance to promote its ideological purpose when complying with the law and good practice. The termination of an association can only be decided by a court of justice through legal proceedings72. 71 See Constitutional Law Committee report PeVM 25/1994 vp, pp. 4–5. 72 Government proposal 64/1988 vp, p. 16. 32 Publications of the Ministry of the Interior 2024:19 National regulation Associations are subject to the Associations Act (503/1989). The scope of the act covers associations established for the fulfilment of an ideological purpose. A registered association may obtain rights, make commitments and be a party to legal proceedings. It should be noted that the Associations Act also regulates unregistered associations, where applicable. Unregistered associations cannot acquire rights or enter into commitments in their own name, nor can they sue or be held liable. With regard to associations, the Finnish Patent and Registration Office (PRH) maintains the Register of Associations but does not have any statutory supervisory powers over associations. In addition to associations, foundations make up a significant group of registered NPOs. According to the Foundations Act (487/2015), a foundation must have a useful purpose, the activities promoting which the foundation supports or engages in. The PRH maintains the Register of Foundations and, in the case of foundations, also acts as a supervisory authority, as its task is to monitor compliance of the activities of foundations with the provisions of the Foundations Act and the bylaws of the foundation. This is due to the fact that, unlike associations and companies, foundations do not have a membership or ownership body to oversee management activities. Control is ex post legality control, which is based on annual declarations provided by foundations. However, it should be noted that, although the PRH maintains both the Register of Associations and the Register of Foundations, it acts as a supervisor only for foundations. NPOs also include religious communities, which are regulated by the Act on the Freedom of Religion (453/2003). Religious communities within the meaning of the Act on the Freedom of Religion consist of the Evangelical Lutheran Church, the Orthodox Church and registered religious communities referred to in chapter 2 of the Act. The PRH maintains the Register of Religious Communities, but the Evangelical Lutheran Church or the Orthodox Church and their parishes are not registered in it. The provisions on beneficial owners in Chapter 6 of the AML Act also apply to associations, religious communities and foundations operating in the NPO sector. Under the AML Act, associations entered in the Register of Associations, religious communities entered in the Register of Religious Communities, and foundations entered in the Register of Foundations must properly obtain and maintain accurate and up-to-date information on their beneficial owners. However, the reporting obligation of the above-mentioned parties regarding beneficial owners differs materially from, for example, the obligations of companies. Associations, foundations or religious communities are not required to separately 33 Publications of the Ministry of the Interior 2024:19 notify the Trade Register of beneficial owners as, according to the Associations Act, the Foundations Act and the Act on the Freedom of Religion, the actual beneficiaries of these entities are considered to be members of the board of directors entered in the Register of Associations, the Register of Foundations or the Register of Religious Communities and, in the case of foundations, also members of the supervisory board. Table 2.  The key competent authorities related to the NPO sector act in a variety of roles in relation to NPOs, as well as in the implementation of humanitarian aid and development cooperation, as well as other foreign and security policy-related activities: Entity Key tasks Regional State Administrative Agency • Can entitle a member, upon application, to convene a meeting of the association at the expense of the association or oblige the association to do so at the risk of a fine. • Can entitle a member, upon application, to hold a voting session at the expense of the association or oblige the association to do so at the risk of a fine. • Can appoint a performance auditor for the association upon notification if an association has no elected a statutory or lawful performance auditor. • Acts as a licensing authority for associations that practise the use of firearms in their activities (excluding exclusively for hunting purposes). Finnish Patent and Registration Office (PRH) • Maintains the Register of Associations • Maintains the Register of Foundations • Maintains the Register of Religious Communities • Supervises compliance with the Foundations Act and the bylaws of foundations National Police Board/Gambling Administration • Issues money collection permits • Supervises collection activities • Issues commodity lottery and bingo permits • Supervises nationally licensed lottery activities 34 Publications of the Ministry of the Interior 2024:19 Entity Key tasks Police departments • Receive notifications of small-scale collections • Issue commodity lottery permits • Supervise lotteries implemented in their areas Ministry for Foreign Affairs • Finances projects and programmes in developing countries • Adopts decisions on grants for development cooperation and humanitarian aid, as well as funding decisions related to other non-governmental activities related to Finland’s foreign and security policy guidelines and international commitments73 • Monitors the use of funds and monitors and evaluates the implementation and results of projects • Also plays an important role in planning, implementing and monitoring sanctions related to, inter alia, CFT74 Ministry of Justice • Manages the drafting of the Associations Act and the Foundations Act Ministry of the Interior • Manages the drafting of the Money Collection Act and lottery legislation Finnish Tax Administration • Taxes non-profit organisations 2.2.2 Registered NPOs in Finland According to the Register of Associations, there were a total of 108,600 active associations in Finland at the beginning of 2024. A more detailed breakdown shows that the majority of these, 108,294, were basic associations. The activities 73 The Ministry of Social Affairs and Health and the Ministry of Education and Culture also make grant decisions. 74 The Ministry for Foreign Affairs is responsible for international cooperation and negotiations related to the imposition of sanctions and their removal. This includes cooperation with other countries and international organisations such as the UN and the EU. In addition, the Ministry for Foreign Affairs supervises and coordinates the implementation of sanctions at the national level, which plays a role in countering terrorism and the financing of terrorism. See Ministry for Foreign Affairs: International sanctions, cited on 7 August 2024. 35 Publications of the Ministry of the Interior 2024:19 of the associations cover a wide field from expressive and leisure activities to activities focusing on the provision of services. At the beginning of 2024, there were 507 religious communities, 354 parishes and 19 chambers of commerce in Finland. According to the Register of Foundations, there were 2,700 active foundations in Finland at the beginning of the year.75 As a rule, associations registered in the Register of Associations are not required to report their financial information to the PRH. Exceptions are made for certain associations which have specific characteristics and are subject to specific legislation, such as political parties.76 In addition, certain associations exceeding the turnover, balance sheet and personnel thresholds are obliged to submit their financial statements to the PRH, as provided for in chapter 3(9)(2) of the Accounting Act (1336/1997). In their annual declarations to the PRH, foundations must submit their financial statements, annual reports and audit reports, as provided for in chapter 5(5) of the Foundations Act.77 The starting point of regulation is that the accounting of associations must be drawn up in accordance with the Accounting Act. However, a new section 37a entered into force in February 2024, providing for micro-associations in accordance with the new terminology. A micro-association is an association that is not a business and whose total amount of grants and other income per financial year did not exceed EUR 30,000 either in the financial year ended or the one immediately preceding. This threshold is also considered to not be met if less than two years have passed since the association was registered and it is not obvious that the association’s income will exceed EUR 30,000 during the financial year. In this accounting under the new model, it is still intended that the association’s income, expenses, assets and liabilities are kept separate so that the association’s members, stakeholders and public authorities can continue to monitor the association’s finances as required.78 The purpose of this new provision is to reduce the administrative burden, especially for small associations, reduce the costs of running operations and support the operating conditions of free civic activities. 75 The data is based on the situation on 1 January 2024. 76 Virén 2014, p. 10. 77 PRH: Säätiöt – vuosiselvitys (“Foundations – annual declaration”), cited on 18 June 2024. 78 See Finnish Federation for Social Affairs and Health (SOSTE): Mikroyhdistysten kevyemmän tilinpidon malli: mikä se on ja millaisille yhdistyksille se sopii? (“A model for lighter accounting for micro-associations: what is it and which types of associations does is suit?”) Available at: https://www.soste.fi/kuukauden-kysymys-mikroyhdistysten- kevyemman-tilinpidon-malli-mika-se-on-ja-millaisille-yhdistyksille-se-sopii/ (in Finnish), cited on 16 September 2024. https://www.soste.fi/kuukauden-kysymys-mikroyhdistysten-kevyemman-tilinpidon-malli-mika-se-on-ja-millaisille-yhdistyksille-se-sopii/ https://www.soste.fi/kuukauden-kysymys-mikroyhdistysten-kevyemman-tilinpidon-malli-mika-se-on-ja-millaisille-yhdistyksille-se-sopii/ 36 Publications of the Ministry of the Interior 2024:19 However, with regard to the possible organisation of collections by micro- associations79, it is very important to take into account the following: Section 12 of the Money Collection Act (863/2019) provides for the filing of the annual declaration of collections. The annual declaration reports, among other things, the proceeds of the collection, the costs incurred in organising the collection and how the funds raised were used in concrete terms. In addition, the approved financial statements of the previous financial year must be attached to the annual declaration. Furthermore, the auditor’s statement must be attached to the annual declaration if the permit holder is a legal person with an auditor. The statement must clarify the reconciliation of the collection income and expenses, as reported in the annual declaration, with the permit holder’s accounts. In practice, this obligation to submit financial statements to the National Police Board in connection with the annual declaration means that, even if the NPO is within the scope of the simplified accounting of micro-associations, the NPO must still submit the financial statements to the National Police Board in connection with the annual declaration in order to fulfil the obligations provided for in the Money Collection Act. 2.2.3 Prohibition of association activities contrary to good practice The provisions on the dissolution of an association laid down in section 43 of the Associations Act apply not only to registered associations, but also to unregistered associations. In this case, an action to have an unregistered association terminated may be brought against one or more members of the association or of its executive committee. The action must be brought before the court of the municipality of residence of the defendant or one of the defendants. (Associations Act, section 59(2)). There are minor differences between an unregistered association and a registered association in terms of who can represent the association. An unregistered association is literally unregistered, so it does not necessarily have a board or chairperson. If the association is unregistered, a termination action may also be brought against persons other than those who manage the affairs of the association. The Government has laid down in a proposal that, if the persons in charge of matters or those to whose actions the termination request is due are unavailable, an action may be brought against any member of the association or its board, if one exists.80 79 For more information on collections, see Section 2.3.3. 80 Government proposal HE 64/1988 vp, p. 78. 37 Publications of the Ministry of the Interior 2024:19 Section 1 of the Associations Act contains a requirement that the purpose of the association must not be unlawful. The requirement of legality must be assessed in accordance with the usual principles of interpretation of the law. An association may be requested to be dissolved by the prosecutor, the National Police Board or a member of the association. The court may declare the association dissolved or, if public interest does not require the dissolution of the association, a warning may be given to the association instead of dissolving it. If an association is declared dissolved or is given a warning, an association belonging directly or indirectly to the association that has been summoned as a defendant may also be declared dissolved or given a warning if it contributed to the proceedings referred to in subsection 1 of the first-mentioned association. The assets of the association may also be confiscated to by state if the assets of the dissolved association cannot be used as stipulated in the bylaws or if the use would be against the law or good practice. In addition, when a matter concerning the dissolution of the association has been brought, the court may, at the request of a concerned party, temporarily prohibit the association’s activities while hearing the matter if it is likely that the association will act in violation of the provisions of section 43(1). At the request of the prosecutor or the National Police Board, a temporary ban may be issued even before the case for the dissolution of the association has been initiated if it is likely that the association will act materially against the law or good practice or unlawfully continue the activities of the dissolved association. Such a prohibition will lapse unless a summons to dissolve the association is requested within 14 days of the prohibition being issued and will remain in force until the matter is heard in a court session. The court must notify the PRH of a decision it issues pursuant to section 43 of the Associations Act. When an association has been declared dissolved or banned from operating on the basis of section 44 of the Associations Act, anyone who represents or acts on behalf of the association or accepts new members to the association or executes a meeting of the association or in any other such manner shall be sentenced, unless a more severe penalty is provided for elsewhere in the act, to a fine for engaging in illegal association activities, as provided for in section 62 of the Associations Act. Thus, the criminal liability provided for in section 62 of the Associations Act applies to a natural person, not a legal person. Studies81 and case law show that, in Finland, the regulation concerning the dissolution of activities according to section 43 of the Associations Act and the suspension of activities according to section 44 has proven to be an effective tool for intervening in activities of associations that are unlawful or contrary 81 See e.g. Päivi Rissanen’s study on participation in an organised crime group. Available at: https://lauda.ulapland.fi/handle/10024/63802, cited on 24 August 2024. https://lauda.ulapland.fi/handle/10024/63802 38 Publications of the Ministry of the Interior 2024:19 to good practice.82 The penal rule of section 62 of the Associations Act may also be applied to anyone who, by representing or acting on behalf of the association or by accepting new members to the association or by organising a meeting of the association or in any other such manner continues the activities of an unregistered association that has been declared dissolved or has been imposed a temporary operating ban. In Europe, there are very few examples of the termination of the activities of an organised criminal organisation on the basis of association legislation, but in Finland it has been done. One reason may be that the freedom of association and assembly guaranteed by the Constitution and human rights standards is considered a very strong right, and people should not be banned from associating lightly.83 Case: Termination of an unregistered association At the end of 2017, the District Court of Pirkanmaa heard a case in which the National Police Board, as the plaintiff, demanded the dissolution of the Finnish branch of an unregistered association and the regional divisions belonging directly or indirectly to it, as well as a registered association that was an integral part of the parent organisation, because the unregistered association in question was acting materially against the law and good practice. In terms of its ideological and political aims, the unregistered association was an exceptionally radical right-wing extremist organisation in the European framework. The district court considered that, in the manner described in the explanatory memorandum, the association acted materially against the law and good practice, taking into account Finnish legislation with regard to illegal activities provided for in the 82 Kimmo Nuotio, Professor of Criminal Law and Director of the Institute of Criminology and Legal Policy at the University of Helsinki, has stated that the dissolution of an association has been adopted as a new way of combatting organised crime. Provisions on the dissolution of an association laid down in the Associations Act apply not only to registered associations, but also to unregistered associations, which makes the instrument flexible. In case law, dissolution has been shown to be a viable means and the grounds have also endured the review of the Supreme Court. See https:// rikoksentorjunta.fi/-/haaste-2-22-lakkauttamiskanteet-aseena-jarjestaytyneen- rikollisuuden-torjunnassa (in Finnish), cited on 4 September 2024. 83 Rikoksentorjunta.fi website, Professor Kimmo Nuotio’s article. https://rikoksentorjunta. fi/-/haaste-2-22-lakkauttamiskanteet-aseena-jarjestaytyneen-rikollisuuden-torjunnassa, cited on 4 September 2024. https://rikoksentorjunta.fi/-/haaste-2-22-lakkauttamiskanteet-aseena-jarjestaytyneen-rikollisuuden-torjunnassa https://rikoksentorjunta.fi/-/haaste-2-22-lakkauttamiskanteet-aseena-jarjestaytyneen-rikollisuuden-torjunnassa https://rikoksentorjunta.fi/-/haaste-2-22-lakkauttamiskanteet-aseena-jarjestaytyneen-rikollisuuden-torjunnassa https://rikoksentorjunta.fi/-/haaste-2-22-lakkauttamiskanteet-aseena-jarjestaytyneen-rikollisuuden-torjunnassa https://rikoksentorjunta.fi/-/haaste-2-22-lakkauttamiskanteet-aseena-jarjestaytyneen-rikollisuuden-torjunnassa 39 Publications of the Ministry of the Interior 2024:19 Criminal Code, the prohibition of abuse of rights, and the content of the International Covenant on Civil and Political Rights (ICCPR) and the International Convention on the Elimination of All Forms of Racial Discrimination enforced in Finland. The district court dissolved the activities of the association on the grounds that there was a social need for dissolution and that the public interest required the dissolution of the association, so a simple warning could not be considered. The matter was also dealt with by the Turku Court of Appeal, which came to the same conclusion in the case. The defendant was allowed to appeal the case to the Supreme Court, which considered that the activities of the association mainly concerned such a material offences against public interest that issuing a warning could not be considered a sufficient sanction and that the association must be dissolved. The Supreme Court judgement84 was handed down in 2020. New dissolution decisions have been taken since the judgment was handed down. 2.3 Classification of the Finnish NPO sector 2.3.1 Associations Associations can be classified85 mainly according to the division below. However, it should be noted that not all registered associations have their own classification category in the PRH’s register, and the division may not be so sharp, as some associations may operate in several sub-sectors at the same time. Nevertheless, the division provides a good overall picture of the diversity of the NPO sector in Finland. In addition to the classification below, the total number of associations in the register includes associations not yet classified, the number of which is very high (approximately 23,800). These unclassified associations were registered at a time 84 KKO 2020:68 (issued on 22 September 2020) 85 This classification was prepared by the NPO project working group on the basis of the existing classification of the PRH’s Register of Associations and Register of Foundations, where applicable. The number of different associations and foundations in the PRH’s registers is according to the situation on 2 January 2024. The number has been rounded to the nearest ten. 40 Publications of the Ministry of the Interior 2024:19 when the PRH did not yet use its current classification system. The classification is always added for new associations and in connection with rule changes in the register. Political associations (quantity: 6,000) y party associations (political parties, their regional and municipal associations, local associations) y women’s organisations, youth organisations and student organisations of political parties y other political associations (including electoral associations, the cooperation and support associations of political parties, associations of independent candidates) The associations mainly carry out political activities and support local associations and election candidates. In addition, the associations participate in civil dialogue and organise events and discussion sessions on current topics. A registered political association may also be registered in the party register of the Ministry of Justice, which has various legal effects, such as the possibility of nominating candidates for parliamentary elections. This registration is regulated separately in the Act on Political Parties (10/1969). At the beginning of 2024, there were a total of 16 political parties in the party register. Professional and business associations (quantity: 11,680) y labour market organisations (employers’ organisations, trade unions of employees and salaried employees, and associations of agricultural producers and forest owners) y associations for different professions/businesses and their promotion y personnel associations y employment promotion associations y associations for investing, saving, consumption and housing y other professional and business associations Professional and business associations engage in a wide range of activities, including agriculture, education, tourism, sports, counselling, advocacy and recreational activities. Some organisations focus on a specific field, such as automotive and transportation or real estate, while others offer a wider range of services. 41 Publications of the Ministry of the Interior 2024:19 Health and social services associations (quantity: 8,040) y illness or disability associations (including patient organisations, associations for people with disabilities, disabled veterans) y associations for child protection, childcare, parenthood and guardianship y associations for the wellbeing of the elderly y associations for substance abuse treatment, abstinence organisations y associations for the promotion of health and wellbeing and the prevention of social exclusion y other health and social services associations The activities of health and social services associations focus mainly on supporting and assisting various minority groups. This includes fundraising for the benefit of persons with disabilities or long-term illnesses, food assistance for the needy, services for the elderly, support for young people, and help for mental health and substance abuse clients. In addition, associations offer various peer support functions and professional support for families and loved ones. Associations have a wide range of services and activities that meet the needs of different groups, and the sector also provides support for research activities. Cultural associations (quantity: 20,220) y science and research associations y studying and education associations y music associations y theatre associations y visual art associations y other art associations y heritage and museum associations y associations for customs, food and drink culture y historical societies, village associations y family history societies y nature, environment and animal welfare associations y ethnic associations y other cultural associations The activities of cultural associations cover a wide range of different cultural and social activities. Many of these associations organise cultural events, exhibitions and concerts or offer grants and scholarships to artists. Others focus on supporting 42 Publications of the Ministry of the Interior 2024:19 the education and employment of immigrants or promoting th