Estonia Tightens Grip on Anti-Money Laundering Regulations

Tallinn, Estonia - In a bid to strengthen its anti-money laundering (AML) framework, Estonia’s financial regulator Finantsinspektsioon has issued a slew of guidelines and recommendations aimed at preventing the use of its financial system for money laundering and terrorist financing.

Guidelines Adopted from European Banking Authority Directives

The guidelines, designed to ensure that credit and financial institutions in Estonia implement robust AML measures to mitigate the risk of money laundering and terrorist financing, have been adopted from European Banking Authority (EBA) directives. The key guidelines issued by Finantsinspektsioon include:

• Customer due diligence
• ML/TF risk assessment
• Compliance management

Guidance on Remote Customer Onboarding Solutions

The regulator has also provided guidance on the use of remote customer onboarding solutions, as well as policies and procedures for managing AML/CFT risks when providing access to financial services.

Estonia’s AML Framework Anchored in National and European Union Laws

Estonia’s AML framework is anchored in a range of national and European Union (EU) laws, including:

• The 6th Anti-Money Laundering Directive
• The Money Laundering and Terrorist Financing Prevention Act

Financial Intelligence Unit Issues Guidelines on Submitting Reports

The country’s Financial Intelligence Unit has also issued guidelines on submitting reports to the unit and identifying suspicious transactions.

“Comply or Explain” Principle Applies

According to Finantsinspektsioon, the “comply or explain” principle will apply to all of its guidelines. This means that obligated entities must be able to justify any deviations from the guidelines or provide explanations for any partial implementations.

Increased Vigilance and Transparency Expected

The move is seen as a significant step forward in Estonia’s efforts to strengthen its AML framework and bring it in line with international standards. The country’s financial sector has faced criticism in recent years over its perceived laxity on AML compliance, leading to calls for increased vigilance and transparency.

Finantsinspektsioon Pledges Increased Supervision

In response, Finantsinspektsioon has pledged to increase its supervision of the financial sector, including conducting regular risk assessments and monitoring the effectiveness of AML measures implemented by obligated entities. The regulator has also committed to cooperating closely with other EU member states and international organizations to combat money laundering and terrorist financing.

Guidelines Available on Finantsinspektsioon’s Website

The guidelines are available on Finantsinspektsioon’s website and will come into effect immediately. Obligated entities are expected to implement the guidelines as soon as possible and report any deviations or partial implementations to the regulator.