Estonia Introduces Digital Identification for Online Transactions
In an effort to simplify online transactions, Estonia has introduced new regulations allowing individuals to participate in financial transactions without being physically present at a location. This law came into effect on May 18th, 2012.
Simplifying Online Transactions
The new regulations enable citizens to use digital identification documents issued by the Republic of Estonia to verify their identity and complete online transactions. This simplification is only applicable for transactions involving fund transfers within Estonia, with a maximum amount per calendar month of €2,000.
Who Can Use Digital Identification?
- Credit institutions
- Financial institutions
- Insurance companies
- Insurance brokers
These obligated persons can identify individuals participating in online transactions using digital ID documents without requiring physical presence. The exception applies only to online transactions within Estonia.
Benefits and Objectives
The new regulations aim to strike a balance between ensuring financial security and facilitating online transactions. They provide a simplified procedure for taking due diligence measures in cases where there is a low risk of money laundering or terrorist financing.
Objectives:
- Promote e-commerce
- Facilitate online transactions
- Maintain robust anti-money laundering and terrorist financing controls
Additional Requirements
Other obligated persons, such as providers of payment services, currency exchange services, and alternative means of payment, are also required to identify and verify customers participating in transactions. However, the new regulations provide an exception for online transactions within Estonia, allowing individuals to use digital ID documents to complete financial transactions without physical presence.
The Estonian government has implemented these measures to promote e-commerce and facilitate online transactions while maintaining robust anti-money laundering and terrorist financing controls.