Financial Crime World

Estonia Takes Tough Stance Against Financial Crime with Multi-Agency Approach

To combat money laundering and terrorist financing, various organizations in Estonia have joined forces to implement effective measures. The Estonian government has taken a proactive approach by establishing a multi-agency framework to prevent these illegal activities.

Roles and Responsibilities

The Ministry of Finance is responsible for overall policy, legislation, and coordination of activities related to anti-money laundering (AML) and combating the financing of terrorism (CFT). The Estonian Financial Intelligence Unit (FIU), an independent unit of the Estonian Police and Border Guard Board, plays a crucial role in analyzing and verifying information about suspected money laundering or terrorist financing.

Swift Action and Coordination

The FIU takes swift action to preserve property where necessary and forwards materials to competent authorities upon detecting elements of a criminal offense. The Prosecutor’s Office, Security Police, Tax and Customs Board, and courts in Estonia are actively working together to identify criminals and establish legal liabilities if necessary.

Strengthening the Financial Sector

The Financial Supervision Authority is responsible for ensuring the stability, reliability, and transparency of Estonia’s financial sector, which is directly connected to preventing money laundering and terrorist financing. As such, it exercises supervision in this field as well.

Governmental Committee and Advisory Committee

To further enhance coordination, a governmental committee was established to promote the fight against money laundering and terrorist financing. Chaired by the Minister of Finance, the committee brings together representatives from ministries, the Tax and Customs Board, Prosecutor’s Office, police, Bank of Estonia, and Financial Supervision Authority.

An Advisory Committee of Market Participants was also created to facilitate information exchange, enhance communication, and gather proposals from market participants. The main goal is to raise awareness among entrepreneurs and involve them in developing legislation. Members include representatives from various associations of entrepreneurs and obligated persons, with the committee serviced by the Ministry of Finance.

Obligated Persons

Citizens of Estonia, particularly those engaged in the financial sector, also play a crucial role in preventing money laundering. According to the Anti-Money Laundering and Terrorist Financing Prevention Act, which came into effect in January 2008, the number of obligated persons required to report large cash transactions to the Financial Intelligence Unit has increased.

The following are considered obligated persons:

  • Banks
  • Entrepreneurs providing financial services
  • Organizers of games of chance
  • Real estate agents
  • Pawnbrokers
  • Auditors
  • Consultants

In some cases, notaries, lawyers, bailiffs, and trustees in bankruptcy must also comply with the law’s requirements.

Identification and Reporting Requirements

To facilitate identification of natural persons or representatives of legal entities, entrepreneurs may request additional information when a contractual relationship is based on a long-term contract or a transaction involves a large sum. Obligated persons must inform the Financial Intelligence Unit about every cash payment exceeding €32,000 or an equal amount in another currency.

Credit institutions have this notification obligation only if providing currency exchange services. Entrepreneurs are required to register in the Register of Economic Activities, while financial institutions not subject to supervision by the Financial Supervision Authority must also register themselves.

Pawnbrokers, currency exchange offices, and entrepreneurs offering SMS-loans and other types of loans must make registration as well to provide their services in Estonia.

Conclusion

Estonia’s efforts against financial crime are a testament to its commitment to preventing money laundering and terrorist financing. The multi-agency approach has been instrumental in strengthening the country’s financial sector and ensuring that obligated persons are aware of their responsibilities. For more information on Estonia’s efforts against financial crime, visit the Ministry of Finance website.