Financial Crime World

Estonian Banking Sector Needs Supervisors’ Training

IMF Assessment Reveals Need for Improvement

A recent assessment by the International Monetary Fund (IMF) has highlighted that Estonian banking supervisors require training to effectively regulate the country’s financial institutions.

Areas of Improvement Identified

According to the IMF’s Core Principles Assessment (CPA), several areas need improvement in Estonia’s banking supervision framework, including:

  • Enforcement Powers: The report noted that there is a lack of legal protection for supervisory agencies and their staff against lawsuits for actions taken in good faith.
  • Legal Protection: The IMF emphasized the importance of amending laws governing banking supervision to provide legal protection for supervisory agencies and their staff.
  • Information Sharing: There is no Memorandum of Understanding (MOU) with the Securities Inspectorate, hindering information sharing between the two bodies.

Additionally, the country’s banking supervisors need training on:

  • Internal Controls
  • Money Laundering Prevention
  • Consolidated Supervision

Estonia’s Efforts to Implement International Standards

Estonia has been working towards implementing international standards for banking supervision since joining the IMF in 2000. However, the CPA revealed that there are still several areas where improvement is needed to ensure the stability of the country’s financial system.

Recommendations and Commitment to Reform

The IMF recommends that Estonia:

  • Amend its laws governing banking supervision to provide legal protection for supervisory agencies and their staff.
  • Conclude an MOU with the Securities Inspectorate.
  • Sign agreements on information sharing arrangements with other countries.

Estonia has agreed to address these issues and has prepared a prioritized action plan to improve its banking supervision framework. The country’s deputy governor in charge of banking supervision and senior officials of the Banking Supervision Department (BSD) have expressed their commitment to implementing the necessary reforms.

Conclusion

The IMF’s CPA is a critical component of Estonia’s ongoing efforts to strengthen its financial system and ensure its stability. With the identified areas for improvement addressed, Estonia can move closer towards achieving this goal.