What Finland's 2026 Bank of Finland & Fund Regulation Changes Mean for Banks, Funds and Compliance

Finland’s financial regulatory landscape shifted significantly in spring 2026, and compliance teams at banks, fund managers and custody providers must now move from awareness to implementation. On 30 March 2026 the Bank of Finland published an updated edition of its rules for counterparties and customers, revising collateral eligibility, counterparty onboarding requirements and settlement participation criteria. Less than three weeks later, on 16 April 2026, Finland’s transposition of the EU’s AIFMD II and UCITS reform package entered into force, introducing new delegation oversight obligations, mandatory liquidity management tools and an expanded supervisory reporting framework, with phased Annex IV reporting obligations beginning 16 April 2027.

This article provides a practitioner-focused roadmap covering both sets of bank of finland rules and fund regulation changes, translating regulatory text into the operational, contractual and data-governance steps that in-house counsel, compliance officers and external advisers need to execute now.

Executive Summary, 30-Second Briefing for Compliance Teams

If you have limited time, focus on three immediate priorities that emerge from the 2026 regulatory changes in Finland:

• Banks and monetary-policy counterparties: Review and update all counterparty agreements and collateral schedules to reflect the Bank of Finland’s 30 March 2026 rules. Particular attention is required for collateral eligibility criteria, margining arrangements and TARGET-Suomen Pankki settlement participation terms.
• Fund managers (AIFM and UCITS ManCos): Update fund rules, prospectuses, delegation agreements and internal compliance policies to meet the requirements of Finland’s AIFMD II / UCITS transposition, which took effect 16 April 2026. Adopt at least two liquidity management tools per open-ended fund and begin embedding them in offering documents and operational procedures.
• Supervisory reporting teams: Start building data pipelines and conducting dry-run submissions for the revised Annex IV supervisory reporting obligations in Finland. Although the phased reporting start date is 16 April 2027, the scope and granularity of the new templates demand early preparation, particularly for loan-originating and leveraged fund data fields.

The table below summarises the three critical dates that every affected institution in Finland must anchor its compliance timeline around.

The remainder of this article unpacks each of these obligations in detail and provides a fund manager compliance checklist, sample contract clause guidance and a quarter-by-quarter implementation roadmap.

Background, What Changed in Finland’s Regulatory Landscape

Bank of Finland Rules Update (30 March 2026)

On 30 March 2026, the Bank of Finland published a revised edition of its Rules for Counterparties and Customers, the comprehensive framework that governs how Finnish credit institutions and other eligible counterparties interact with the central bank across monetary-policy operations, collateral management, payment systems and securities settlement. The update reflects changes flowing from the Eurosystem’s evolving collateral framework and incorporates adjustments to TARGET-Suomen Pankki participation requirements that had been signalled throughout 2025.

The updated bank of finland rules cover several critical operational areas. Collateral eligibility criteria have been tightened for certain asset classes, requiring counterparties to reassess their pool of pledgeable securities. Margining and valuation haircut schedules have been recalibrated to align with ECB guidance. Counterparty onboarding documentation requirements now include enhanced due-diligence disclosures, and participation terms for TARGET-Suomen Pankki, Finland’s component of the Eurosystem’s consolidated payment and securities settlement infrastructure, have been updated to reflect recent platform changes.

For banks operating in Finland, the practical effect is that legal, treasury and operations teams must review every agreement, collateral schedule and internal procedure that references the Bank of Finland’s counterparty rules. Waiting for the next regular agreement refresh cycle is unlikely to be sufficient, the changes require proactive document review and, in many cases, renegotiation of supplementary terms with the central bank.

EU Fund Regulation Reforms (AIFMD II / UCITS Directive Amendments)

In parallel, Finland transposed Directive (EU) 2024/927 (AIFMD II) and the accompanying UCITS Directive amendments into national law, with the new provisions entering into force on 16 April 2026. The finland fund regulation reforms represent the most significant overhaul of the alternative investment fund and UCITS framework since the original AIFMD was adopted in 2011. Key changes include harmonised rules for loan-originating funds, strengthened delegation and oversight requirements, mandatory liquidity management tools for open-ended funds, and a materially expanded supervisory reporting regime under revised Annex IV templates.

The Annex IV supervisory reporting obligations in Finland are subject to a phased implementation timeline: the new templates and data fields will apply from 16 April 2027, giving fund managers approximately twelve months from the transposition date to build, test and certify their reporting infrastructure. Finanssivalvonta (FIN-FSA), Finland’s financial supervisory authority, has indicated that it expects managers to begin internal preparation immediately and to engage in dialogue with the authority well before the formal reporting go-live date.

What the Bank of Finland Rules Mean for Banks and Counterparties

The 30 March 2026 update to the bank of finland rules for counterparties and customers creates specific operational obligations that banks and eligible counterparties must address across four functional areas: collateral management, counterparty documentation, TARGET-Suomen Pankki settlement, and internal compliance processes.

Collateral Eligibility and Valuation Changes

The revised rules narrow the eligibility criteria for certain categories of non-marketable assets and introduce updated valuation haircuts for asset-backed securities. Banks that rely on a broad collateral pool to support Eurosystem monetary-policy operations should conduct an immediate gap analysis comparing their current collateral inventory against the new eligibility schedule. Where assets are no longer eligible, or where haircuts have increased materially, treasury teams will need to source replacement collateral or adjust funding strategies accordingly.

Sample action items for collateral teams include:

• Inventory audit. Map every pledged and pledgeable asset against the updated eligibility list published in the Bank of Finland rules annex.
• Haircut recalculation. Re-run collateral coverage calculations using the new valuation haircut schedule; identify any shortfalls in available collateral buffers.
• Replacement sourcing. Where gaps emerge, initiate repo or securities-lending arrangements to maintain adequate collateral headroom.
• Documentation update. Amend internal collateral policy documents and any bilateral annexes with the Bank of Finland that reference superseded eligibility criteria.

Counterparty Agreement Updates and Onboarding

The updated rules introduce expanded due-diligence disclosure requirements at onboarding and for existing counterparties during periodic reviews. Banks should expect requests from the Bank of Finland for supplementary documentation on governance, beneficial ownership and operational resilience. Counterparty agreements, including the master agreements governing access to Eurosystem operations, should be reviewed to confirm that representations, warranties and information-undertaking clauses remain consistent with the new requirements.

Suggested contract review points include clauses addressing the obligation to notify the Bank of Finland of material changes to corporate structure, the accuracy of submitted collateral data, and the bank’s commitment to comply with updated TARGET-Suomen Pankki participation rules. Where existing agreements contain static references to earlier editions of the rules, legal teams should replace these with dynamic references that automatically incorporate future amendments.

TARGET-Suomen Pankki Settlement Implications

For participants in TARGET-Suomen Pankki, the updated rules align Finnish participation terms with the consolidated TARGET platform’s technical and legal requirements. Industry observers expect that the most immediate practical effect will be felt in settlement-timing protocols, auto-collateralisation procedures and the treatment of intraday credit limits. Payment-operations teams should review their standing instructions and system configurations to ensure continued seamless settlement.

What the AIFMD/UCITS Transposition Means for Funds and Fund Managers in Finland

Scope, Which Fund Types Are Affected

The finland fund regulation reforms apply to all Finnish-authorised AIFMs and UCITS management companies. The expanded scope captures several previously unregulated or lightly regulated activities. Loan-originating AIFs, funds that originate loans as a primary strategy, are now subject to specific capital retention, leverage and diversification requirements. Open-ended credit funds face new restrictions on concentration limits and must comply with enhanced investor disclosure obligations.

For UCITS management companies, the changes are less transformative but still require compliance action. Updated delegation rules, expanded depositary obligations and the mandatory adoption of liquidity management tools all apply to UCITS managers with immediate effect from 16 April 2026. Closed-ended private equity and venture capital funds are generally less affected, though managers of such funds must still comply with updated Annex IV reporting and delegation oversight rules.

Delegation and Oversight Changes

One of the most operationally significant elements of the 2026 changes is the strengthening of delegation oversight requirements. Fund managers that delegate portfolio management, risk management or other critical functions to third parties must now demonstrate enhanced supervisory capabilities, including minimum staffing and expertise at the delegating entity, documented review cycles of delegated activities, and the ability to revoke delegated mandates at short notice without disrupting fund operations.

The likely practical effect is that managers relying heavily on delegation, particularly to entities outside the EU, will need to invest in additional compliance headcount and internal monitoring infrastructure. Finanssivalvonta 2026 guidance has signalled that the authority will scrutinise delegation arrangements closely during supervisory inspections and expects to see evidence of substantive oversight, not merely formal documentation.

Depositary and Custody Implications

Depositaries face an expanded liability framework under the transposed rules. The revised depositary passport provisions clarify cross-border depositary appointment rules and impose stricter requirements on the segregation of client assets held by sub-custodians. Custody agreements must be updated to reflect the new liability allocation, to incorporate enhanced reporting to the depositary from sub-custodians, and to address the depositary’s strengthened obligation to verify asset ownership.

Practical Impact on Marketing and Non-EU Fund Access

Non-EU fund managers marketing into Finland under national private-placement regimes should be aware that the transposed rules introduce additional conditions for market access, including enhanced regulatory co-operation arrangements between Finanssivalvonta and the manager’s home-state supervisor. Early indications suggest that managers from jurisdictions without adequate supervisory co-operation agreements may face delays or restrictions when seeking to market into Finland.

Seven-Point Fund Manager Compliance Checklist

Fund managers operating in or marketing into Finland should work through the following investment firm compliance Finland checklist as a minimum:

1. Conduct a regulatory-perimeter review to confirm which funds and activities fall within the expanded AIFMD II / UCITS scope.
2. Update all fund constitutional documents (fund rules, articles of incorporation, prospectuses) to reflect new disclosure, liquidity-tool and loan-origination requirements.
3. Review and renegotiate delegation agreements with all delegates, ensuring enhanced oversight clauses, minimum staffing commitments and revocation-readiness provisions.
4. Amend depositary and custody agreements to incorporate the updated liability, segregation and sub-custodian reporting standards.
5. Select and operationalise at least two liquidity management tools per open-ended fund, and update prospectus language accordingly.
6. Begin building data infrastructure and internal processes for the revised Annex IV supervisory reporting (go-live: 16 April 2027).
7. Brief the board and senior management on the implementation timeline, resource requirements and residual compliance risks; document the board’s sign-off and the rationale for all key implementation decisions.

Supervisory Reporting and Annex IV, Obligations, Timing and Data

What the Revised Annex IV Will Require

The revised Annex IV reporting templates under AIFMD II significantly expand the scope and granularity of data that fund managers must submit to their national competent authority. New data fields cover loan-originating fund activities (loan portfolios, credit quality, concentration), delegation arrangements (identity and location of delegates, scope of delegated functions), liquidity risk profiles and the use of liquidity management tools. The templates also impose more detailed leverage reporting, including both gross and commitment methods, and require managers to provide enhanced information on investment strategies, counterparty exposures and environmental, social and governance (ESG) risk metrics.

For managers already reporting under the current Annex IV framework, the transition will require mapping existing data fields to the new template structure, identifying gaps where new data points are required, and establishing feeds from portfolio-management systems, loan-servicing platforms and risk engines into the reporting pipeline.

Finland-Specific Supervisory Reporting Timing

The supervisory reporting obligations Finland timeline provides a twelve-month implementation window. The revised Annex IV templates will become mandatory for Finnish-authorised managers from 16 April 2027. Finanssivalvonta has confirmed that it will accept voluntary pilot submissions during the transition period and encourages managers to submit test filings to identify data-quality issues before the formal go-live date.

How to Prepare, Data Governance and System Readiness

Compliance teams should take the following steps in the twelve-month window before mandatory reporting begins:

• Data-field mapping. Compare current Annex IV submissions field-by-field against the revised template; flag every new or amended data point.
• Source identification. For each new data point, identify the source system (portfolio management, risk, loan servicing, ESG data provider) and confirm data availability and quality.
• Vendor engagement. Contact reporting-technology vendors to confirm their template-update timelines and testing schedules.
• Dry-run submissions. Submit at least two pilot filings to Finanssivalvonta during the voluntary testing window to surface data-quality issues and formatting errors.
• Governance sign-off. Document the data-governance framework, including roles and responsibilities for data accuracy, and obtain board-level sign-off on the reporting-readiness plan.

Liquidity Management Tools (LMTs), Required Changes and Implementation Steps

The LMT Menu Under AIFMD II

The 2026 reforms require managers of open-ended AIFs and UCITS to select and operationalise at least two liquidity management tools from a harmonised EU menu. The available tools for liquidity management funds Finland managers include redemption gates, swing pricing, anti-dilution levies, redemption fees, notice periods, side pockets and partial redemptions (in-kind). The choice of tools must be proportionate to the fund’s investment strategy, redemption frequency and underlying asset liquidity profile.

Policy and Prospectus Updates

For each selected LMT, the fund’s prospectus and constitutional documents must disclose the tool’s mechanics, the circumstances under which it may be activated, the decision-making authority (typically the board or senior management of the manager) and the notification procedures for investors and Finanssivalvonta. Managers should work with legal counsel to draft prospectus language that is both compliant and commercially workable, overly broad activation triggers risk investor pushback, while overly narrow triggers may render the tool impractical in a genuine liquidity event.

Operational Testing and Stress-Testing Guidance

Adopting an LMT on paper is not sufficient. Managers must demonstrate that the selected tools can be activated operationally under stressed conditions. This means conducting end-to-end operational dry runs, including system testing of NAV-adjustment calculations for swing pricing, transfer-agent workflow testing for gate implementation, and board-notification simulations. Liquidity stress tests should incorporate scenarios that specifically model the activation and impact of each selected LMT.

Operational Playbook Essentials

Industry observers expect Finanssivalvonta to ask managers to maintain an internal LMT playbook documenting the escalation path (who decides to activate), the operational steps (system changes, investor communications, regulatory notifications), and the post-activation review process. The playbook should identify responsible individuals by role, set out communication templates, and include contact details for the transfer agent, depositary and legal counsel.

Contracts, Delegation and Custody, What to Update Now

Delegation Agreements Checklist

Delegation agreements between fund managers and their portfolio-management or risk-management delegates should be reviewed against the following minimum standards under the bank of finland rules and AIFMD II transposition:

• Supervisory access. The agreement must grant the manager (and, by extension, Finanssivalvonta) full access to the delegate’s books, records and personnel for the purposes of supervisory review.
• Audit rights. The manager must have contractual authority to conduct on-site and remote audits of the delegate at reasonable notice and without restriction.
• SLA metrics. Performance standards and compliance KPIs must be documented and subject to regular review, at minimum semi-annually.
• Revocation readiness. The agreement must permit the manager to revoke the delegation immediately where necessary to protect investor interests, with a transition plan that ensures continuity of fund operations.
• Sub-delegation controls. Any further delegation by the delegate must require the manager’s prior written consent and must be subject to equivalent oversight standards.

Custody and Depositary Contract Clauses to Update

Key clauses requiring amendment in custody and depositary agreements include:

• Liability allocation. The depositary’s liability for loss of financial instruments held in custody, including by sub-custodians, must be expressed in terms consistent with the new framework, which limits the depositary’s ability to contractually discharge liability to sub-custodians absent specific conditions.
• Asset segregation. Clauses governing the segregation of fund assets at the sub-custodian level must be strengthened to reflect the updated requirements for omnibus versus individually segregated account structures.
• Reporting obligations. Sub-custodians must be contractually required to provide enhanced reporting to the depositary on asset-reconciliation, settlement-fail rates and any material operational incidents affecting the safekeeping of fund assets.
• Termination and transition. Exit provisions must address the orderly return or transfer of all assets and data within commercially reasonable timeframes, with clear allocation of costs and responsibilities.

Implementation Roadmap and Practical Checklist, Action Plan by Quarter

The following quarter-by-quarter timeline provides a structured approach for fund managers and banks in Finland to achieve full compliance with the 2026 changes. The roadmap assumes a start date of Q2 2026, immediately following the 16 April 2026 transposition.

• Q2 2026 (Immediate, April to June). Obtain board approval for the compliance implementation programme and allocate budget. Complete the regulatory-perimeter review. Begin updating fund constitutional documents and delegation agreements. Initiate collateral-inventory audits for banks affected by the Bank of Finland counterparties customers rules. Assign a project lead for Annex IV reporting readiness.
• Q3 2026 (July to September). Finalise prospectus and fund-rule amendments for LMTs and submit to Finanssivalvonta for approval where required. Complete delegation-agreement renegotiations. Conduct data-field mapping for Annex IV reporting. Engage reporting-technology vendors on template updates and testing timelines.
• Q4 2026 (October to December). Run first round of Annex IV dry-run submissions. Conduct operational dry runs for LMT activation. Complete custody and depositary agreement amendments. Deliver compliance-training sessions for front-office, operations and risk staff.
• Q1 2027 (January to March). Run second round of Annex IV pilot submissions, incorporating feedback from Finanssivalvonta. Complete end-to-end system integration testing for reporting pipelines. Finalise LMT playbooks and stress-test documentation. Compile the compliance-evidence file for supervisory inspection readiness.
• Q2 2027 (April, Go-Live). First mandatory Annex IV submissions due from 16 April 2027. Conduct post-submission quality review and establish ongoing monitoring cadence. Schedule board report on implementation completion and residual-risk assessment.

Minimum evidence to maintain for supervisors includes: board minutes documenting approval of each implementation phase, signed and executed delegation and custody agreements, completed data-field mapping documentation, records of dry-run submissions and Finanssivalvonta feedback, LMT stress-test reports, and staff-training attendance records.

Conclusion, Navigating the Bank of Finland Rules and Fund Reforms

The convergence of the updated bank of finland rules and Finland’s AIFMD II / UCITS transposition creates a concentrated period of regulatory change that demands co-ordinated, cross-functional responses from banks, fund managers and service providers. Institutions that treat these changes as a single integrated compliance programme, rather than isolated workstreams, will be best positioned to meet every deadline, from the counterparty-agreement updates required now through to the Annex IV reporting go-live in April 2027. For tailored guidance, compliance audits or assistance with document reviews, consult a qualified banking and finance lawyer through the Global Law Experts lawyer directory.

Sources

1. Bank of Finland, Rules for Counterparties and Customers
2. Bank of Finland, News and Topical
3. Finanssivalvonta (FIN-FSA)
4. Borenius, Finland Implements Fund Regulation Reforms – Effective 16 April 2026
5. FinancialRegulations.eu, AIFMD II Liquidity Management Tools Guide
6. FinancialRegulations.eu, AIFMD II April 2026 Changes
7. JD Supra, AIFMD2 Implementation: Key Questions