Customer Identification – Why Does the Real Estate Agency Ask?
Real estate agencies, like banks, are entities defined under the Anti-Money Laundering Act. Therefore, they are obliged to investigate certain aspects required by law from their clients. The clients of a real estate agency include both the principal (usually the seller or landlord) and the counterparty (usually the buyer or tenant).
If a real estate agency fails to comply with its legal obligations, it could face criminal liability. All information and documents provided by the client to the agency are handled confidentially.
Why Does the Agency Verify Identity?
According to Finnish law, a real estate agency must know its clients. As part of this requirement, the agency must reliably verify the client’s identity using an identity document. The following valid identity documents issued by a Finnish authority are accepted:
- Driver’s license
- Identity card issued by the police (including identity cards issued to foreigners)
- Passport
- KELA card with a photo
- Alien’s passport or refugee travel document.
For foreign documents, a valid passport or an identity card accepted as a travel document is required. The client must be identifiable from the photo on the identity document; documents without a photo are not accepted. Foreign driver’s licenses are not accepted as identity documents. The agency must collect certain information from the identity document, usually by copying it.
Politically Exposed Persons (PEP)
Finnish law requires the agency to also determine if the client is a politically exposed person or a family member or business partner of such a person.
Corporate Clients
The agency must identify corporate clients using documents from reliable, independent sources, such as an extract from the trade register. The agency must also obtain information about the company’s business, structure, and owners. To support this information, the agency has the right to request financial statements, articles of association, and other necessary documents from the corporate client.
For foreign companies, identification documents may include an extract from the country’s company register, articles of association, and financial statements. The required documents may vary depending on the company’s structure and country of origin. The company’s representatives must also be identified and their identities verified. The agency must also identify the company’s beneficial owners and, if necessary, verify their identities. Beneficial owners are usually the company’s owners.
Authorization Situations
When a client has an agent, the agency must know both the agent and the principal.
Verification of Source of Funds
If a transaction deviates from the ordinary, the agency is obliged to inquire about the purpose of the transaction and the source of the funds from the client. The agency may also need to see relevant agreements or other documents to verify the source or intended use of the funds.
Refusal of Agreement
The agency must request sufficient information to verify the client’s identity and the nature of the legal transaction. The extent of the required information, such as the necessary explanations and documents, is at the agency’s discretion as per Finnish law. If the agency does not receive all the required information to support the conclusion of the assignment or the execution of the transaction, it must refuse the client relationship or transaction.
Politically exposed person (PEP)
INSTRUCTIONS:
Politically Exposed Person (PEP) refers to an individual who holds or has held a prominent public position within the past year:**
1. Head of state, head of government, minister, or deputy or assistant minister
2. Member of parliament
3. Member of governing bodies of political parties
4. Member of supreme courts, constitutional courts, or other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances (In Finland, this includes the Supreme Court, the Supreme Administrative Court, the Labour Court, and the Insurance Court)
5. Member of courts of auditors or the highest decision-making bodies of state financial management, equivalent to the National Audit Office of Finland
6. Member of the board of a central bank
7. Ambassador or chargé d’affaires
8. Officer in the armed forces holding a rank of general or above
9. Member of the administrative, management, or supervisory body of a state-owned enterprise
10. Director, deputy director, or member of the board of an international organization
PEP’s family members include:
1. Spouse or partner considered equivalent to a spouse under the national law of the relevant country
2. Children and their spouses or partners as referred to above
3. Parents
PEP’s close associates include:
1. Any natural persons who are known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relationship with the politically exposed person or their family members
2. Any natural persons who have sole beneficial ownership of a legal entity or legal arrangement that is known to have been established for the benefit of the politically exposed person or their family members
