ESTONIA: Banking Sector Must Comply with Compliance Procedures or Explain Non-Compliance

Regulatory Authority Issues Advisory Guidelines for Banking Sector

The Estonian financial regulatory authority, Finantsinspektsioon, has issued a series of advisory guidelines to ensure compliance with anti-money laundering (AML) and terrorist financing (TF) regulations in the country’s banking sector.

Guidelines Based on European Banking Authority Recommendations

The guidelines are based on recommendations from the European Banking Authority (EBA) and require banks to implement robust AML/TF prevention measures. The guidelines provide guidance on:

Customer due diligence
Risk assessment
Reporting requirements

Comply or Explain Principle Applies

According to Finantsinspektsioon, the “comply or explain” principle applies to these guidelines. This means that financial institutions must either comply with the requirements or provide a clear explanation for any non-compliance.

Additional Guidelines Issued

Finantsinspektsioon has also issued separate guidelines on:

The application of international sanctions in credit and financial institutions
Policies and procedures for managing money laundering and terrorist financing risks

Adoption of International Guidelines

The agency has adopted EBA guidelines on customer due diligence, risk assessment, and reporting requirements. Additionally, Finantsinspektsioon has joint guidelines with other European authorities on cooperation and information exchange to prevent AML/TF.

Legislation Enacted to Prevent Money Laundering and Terrorist Financing

The Estonian government has enacted legislation aimed at preventing money laundering and terrorist financing, including:

The Money Laundering and Terrorist Financing Prevention Act
International Sanctions Act
Tax Information Exchange Act

Objectives of the Guidelines

The guidelines are intended to ensure that Estonia’s banking sector is in line with European Union regulations and international standards for AML/TF prevention.