As reported by Lithuanian LRT at the end of November 2023, some Finnish companies deliberately violate EU sanctions imposed in connection with the territorial violation of Ukraine. This has allowed one of them to double its annual profits. In these circumstances, when establishing cooperation with a Finnish contractor, it is worth thoroughly checking them and their potential connections with Belarus or Russia. Polish entrepreneurs face high penalties – up to PLN 20 million and up to 15 years of imprisonment – for violating EU sanctions, including through cooperation with such restricted companies. In this article, you will learn how to check a company from Finland.
Exercising due diligence in contractor verification
Establishing a company is very easy nowadays, often possible without leaving home, through the Internet. Therefore, one can never be certain who is truly behind a created name and registry entry until it is verified. Verification involves actions commonly used in business intelligence, primarily checking the credibility and currency of the contractor’s documentation, National Court Register (KRS), tax identification number (NIP), statistical number (REGON), as well as permits and certificates necessary for specific activities. Verification can be done by obtaining information from relevant individuals and institutions such as: registration courts, Social Insurance Institution (ZUS), tax offices, national and international chambers of commerce. It is advisable to delve into the history of the business and its owners, including reviews about the company, by searching the Internet, consulting other entrepreneurs, contractors of the entity, and directly with the party involved. Failing to exercise due diligence in selecting a contractor carries legal consequences, such as charges of knowingly participating in irregularities and subsequent tax and legal sanctions.
Economic cooperation with Finland
In 2021, Finland was Poland’s 23rd-largest export partner and 28th-largest import partner globally. Conversely, Poland was the 8th-largest exporter and 12th-largest importer to and from Finland, respectively. The main exports to Finland include industrial machinery, non-ferrous metals and derivatives, chemicals, and agri-food products, as well as products from the light industry (mainly textiles, wood, and paper products). From Finland, Poland imports mainly products from the wood and paper industry, non-ferrous metals and derivatives, chemical products (mainly plastics), and industrial machinery.
According to the National Bank of Poland, Finnish capital investments in Poland exceeded 1.6 billion euros in 2021. By the end of 2020, there were 259 entities registered in Poland with Finnish capital. As of the end of 2021, Polish direct investments in Finland amounted to over 192 million euros. Since May 2006, Finland has opened its job market to Polish citizens. Potential areas of cooperation between both countries include nuclear energy, information technology, innovation, wood and paper industry development.
Economic relations are primarily governed by EU regulations due to the membership of both countries in the European Union. Additionally, there is a bilateral agreement on the prevention of double taxation from October 26, 1977, effective since April 4, 1979, amended by the protocol from April 28, 1994, in force since January 21, 1995, and a convention on the avoidance of double taxation and prevention of tax evasion regarding income taxes, signed in Helsinki on June 8, 2009. In 2011, the prime ministers of both countries signed a joint statement on enhanced cooperation.
National and EU sanctions
In connection with the violation of Ukraine’s territorial integrity, the European Union imposed 11 sets of sanctions on Russia by June 23, 2023. Poland also imposes additional sanctions, affecting key individuals in Russia and companies from both Russia and Belarus. Trading goods and services with Russian and Belarusian companies is prohibited, with Polish entrepreneurs facing financial penalties of up to PLN 20 million and up to 15 years of imprisonment for violations. However, Russian and Belarusian entrepreneurs have learned to bypass international bans, using complex holding structures established in other countries where it is challenging to detect the real ownership structure.
According to LRT (Lietuvos nacionalinis radijas ir televizija – Lithuanian national radio and television), there are suspicions that entrepreneurs are smuggling various goods subject to sanctions across the Russian-Finnish border. Customs authorities have initiated over 600 investigations in this matter, and Finland imposes a penalty of up to 4 years of imprisonment for such offenses. Customs officials find it challenging to catch all attempts to violate EU sanctions, partly because shipping documents often indicate destinations other than Belarus or Russia, such as Kazakhstan, where importing goods is entirely legal.
Detailed information on the types of economic transactions with Belarus and Russia covered by EU sanctions can be found on the European Council’s websites: https://www.consilium.europa.eu/. The Official Journal of the EU at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0269-20220721 contains a list of individuals and entities subject to sanctions. The Polish Ministry of Internal Affairs and Administration also maintains an updated register of entities subject to sanctions, where one can check a contractor, their connections, reasons for inclusion, and applied sanctions: https://www.gov.pl/web/mswia/lista-osob-i-podmiotow-objetych-sankcjami.
In the first step of checking a company from Finland, it is advisable to see if it is listed in any of the above registers. Useful information can also be obtained from Regulation (EU) 2022/576 of April 8, 2022, amending Regulation (EU) No 833/2014 concerning restrictive measures in connection with Russia’s destabilizing actions in Ukraine.
On August 3, 2023, the European Union expanded the scope of sanctions imposed on Belarus to combat circumvention of regulations. The new measures amend Regulation (EC) No 765/2006 concerning restrictive measures in connection with the situation in Belarus. The changes ensure a closer alignment of EU sanctions against Russia and Belarus and help ensure that Russian sanctions cannot be bypassed by Belarus. These measures extend the export ban to Belarus for a range of highly sensitive goods and technologies contributing to Belarus’s military and technological strengthening. The Council also imposes an additional ban on the export of firearms and ammunition, as well as goods and technologies suitable for use in aviation and the aerospace industry. The changes also align sanctions against Belarus with the Russian sanctions system. These restrictive measures were introduced urgently due to the urgent need to combat circumvention of regulations regarding certain highly sensitive goods and technologies.
Business intelligence, or how to check a contractor from Finland?
Verification of a contractor can be entrusted to a professional business intelligence agency specializing in such orders. A private detective in Warsaw, Poznań, Wrocław, or other cities will know how to obtain necessary information verifying the current or future contractor. The most crucial way to verify a contractor and their potential connections with Belarus or Russia is to determine the actual beneficiary and then check whether they are listed on the aforementioned sanctions list maintained by the Ministry of Internal Affairs. This can be done in the Central Register of Ultimate Beneficial Owners maintained by the Ministry of Finance: https://crbr.podatki.gov.pl/adcrbr/#/wyszukaj
Environmental intelligence
A publicly available method of obtaining information about a contractor is to search the resources of the Internet. Verifying a company, checking if it has a website, and examining reviews about it may provide useful insights. If one does not want to do this independently for certainty, they can entrust the research to a detective agency specializing in professional business intelligence. Because there are many more sources of information than just the WWW. One can, for example, inquire with the Polish Embassy in Helsinki about a specific entity, whether complaints have been received from other entrepreneurs, or if, according to the diplomatic mission’s knowledge, the Finnish contractor has a bad reputation. Similar information can be provided by Polish-Finnish chambers of commerce.
Direct inquiry to the contractor
In case of difficulties in determining the ownership structure of a business partner using available registers, another method of checking within business intelligence is to directly request confirmation of who their ultimate beneficiary is. To validate the provided answer, one can ask the Finnish entrepreneur to present documents confirming their declarations.
Polish and EU registers
The Ministry of Entrepreneurship and Technology, as the minister responsible for the economy, maintains a register of representations of foreign entrepreneurs in the Public Information Bulletin. If the representative office of the contractor is found in this register, one can assume that they still exist and conduct business.
Another such register to check a contractor is the European Union’s VAT taxpayer register and the EORI register. Businesses and individuals wanting to conduct commercial activities in the European Union must use the EORI number as an identification number in all customs procedures. The VAT Information Exchange System (VIES) is a search engine run by the European Commission, allowing verification of whether a particular entity is registered as conducting intra-community transactions. This is essential for applying a 0% VAT rate to a specific transaction. If VIES does not confirm the registration of the contractor, one can request verification from the tax office of the country where they are based. It is also advisable to check if the company has the necessary permits and certificates if required in a given country. The EU Business Register (http://www.eubusinessregister.org/) enables searching for companies worldwide.
The Register of Insolvent Debtors allows checking whether a particular contractor is not listed. There are also economic information bureaus that have detailed information about the activities of companies. BIK, the Credit Information Bureau, established by the Polish Bank Association, collects data on the credit history of bank, credit union, and non-bank loan company customers.
Finnish company registers
The Finnish Patent and Registration Office (PRH) manages and maintains the official Trade Register https://www.prh.fi/en/kaupparekisteri.html. It is a public register containing information about entrepreneurs (companies). In principle, all companies must be registered in the register. Entrepreneurs must also report any changes in their registration data. Most companies must also submit their annual financial reports to the register.
The Trade Register has a joint reporting procedure and information service with the tax administration. The Business Information System for Enterprises and Communities, YTJ (Finnish information system for businesses and communities), is a free information service shared by the National Council of Patents and Registration and the Tax Administration but operated by the PRH https://www.ytj.fi/en/index.html. It contains contact and identification information about companies, such as:
• The company’s name and any equivalent or auxiliary names;
• Business identification number, form of the company, and its registered office;
• Address and other contact details;
• Main business activity;
• Tax and KRPR administration registers in which the entity is registered;
• Information about the termination of activities, interruptions, bankruptcy proceedings, liquidation, or rehabilitation.
Access to basic data in the register is free, but other information is subject to a fee. Paid information includes, for example, data about persons responsible for the company, the industry sector entered in the trade register, and information about capital. Access to the register is available in English, Finnish, and Swedish. Direct search engine link: https://tietopalvelu.ytj.fi/
Asiakastieto.fi – a commercial service, paid, where financial information about companies and credit information (possible checking for any payment delays) can be found. Available in English and Finnish. https://www.asiakastieto.fi/web/fi/
InfoClipper is a commercial service that also allows obtaining reliable informational reports about Finnish companies. Available in English. https://www.info-clipper.com/en/company/search/finland.fi.html
It is advisable to thoroughly check a contractor
Before engaging in a transaction, establishing cooperation with a contractor from Finland, it’s better to conduct economic intelligence especially to ensure they are not associated with Belarus or Russia. Violating restrictions on specific types of transactions with these countries and with certain individuals and companies may result in financial penalties of up to PLN 20 million and 3 to 15 years of imprisonment. Additionally, verifying a contractor and exercising due diligence in their selection is a requirement when conducting business, imposed on entrepreneurs as professional market participants.
Do you now know how to check a company from Finland? If not, or if you need more detailed information, we can help. Feel free to contact us.
