Estonia’s AML/CFT Regulations Under Scrutiny: Compliant in Most Areas, but Room for Improvement
The Financial Action Task Force (FATF) has released its Mutual Report 2022 on Estonia, evaluating the country’s implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. The report highlights Estonia’s progress in implementing the technical requirements of the FATF Recommendations, but also identifies areas that require attention.
Compliance Rating
Estonia received a “compliant” rating for 14 out of the 40 recommendations, indicating that it has fully implemented the relevant standards. The country was found “largely compliant” with 17 recommendations, meaning that it has made significant progress but requires further improvement in certain areas. Four recommendations were rated as “partially compliant,” while five were deemed “non-compliant.”
Strengths and Weaknesses
The report highlights Estonia’s strengths in implementing risk-based approaches, national cooperation and coordination, and financial institution secrecy laws. However, the country was found to be lacking in some key areas, including:
- Confiscation and provisional measures
- Targeted financial sanctions related to terrorism and terrorist financing
- Transparency and beneficial ownership of legal persons
Recommendations for Improvement
Estonia has been praised for its efforts to improve its AML/CFT regime, but the report notes that more needs to be done to address weaknesses in certain areas. The country’s supervisory authorities have been urged to:
- Strengthen their oversight and enforcement powers
- Enhance customer due diligence procedures and record-keeping practices
FATF Recommendations
The FATF recommendations are designed to help countries prevent the misuse of their financial systems for illicit purposes, such as money laundering and terrorist financing. Estonia’s rating reflects its progress in implementing these standards, but also identifies areas that require further attention and improvement.
Conclusion
While Estonia has made significant strides in implementing AML/CFT regulations, there is still room for improvement to ensure that the country’s financial system remains robust and resilient against illicit activities. The FATF report provides a roadmap for Estonia to continue improving its AML/CFT regime and maintaining its position as a reliable partner in the global fight against money laundering and terrorist financing.