Financial Crime World

Estonia’s Robust Anti-Money Laundering (AML) Framework: A Global Model of Success

The Estonian economy, recognized as developed by the International MonETF Fund (IMF), is protected by strict AML laws and regulations. Here’s how Estonia aligned with international standards and became a global AML success story.

Estonia’s AML Journey: European Integration and Continuous Updates

  • EU Membership: In 2004, Estonia became an EU member.
  • Integration of 1AMLD: Estonia adopted the First EU Money Laundering Directive (1AMLD), marking a crucial step towards aligning with international standards.
  • Periodic Amendments: Subsequent amendments kept Estonia’s AML laws up-to-date with the EU and FATF recommendations.

Essential Legislation: Establishing a Strong Foundation for AML Compliance

  • Passage of Money Laundering and Terrorist Financing Prevention Act: A significant milestone in 2008, this act brought banks, financial services, gambling organizers, and real estate agents under the jurisdiction of the Anti-Money Laundering (AML) laws.
  • Sixth EU Money Laundering Directive (6AMLD): Estonia adopted 6AMLD in 2020, furthering its commitment to international collaboration.

Handling Challenges: Responding to the Danske Bank Scandal and Bolstering the AML Framework

Despite efforts, Estonia faced challenges, most notably the Danske Bank scandal between 2017 and 2018. In response, Estonia intensified its AML measures, reflected in FATF’s latest Mutual Evaluation:

  • FATF Compliance Ratings: Estonia was rated as compliant for 7 recommendations and largely compliant for 18 of the FATF 40 Recommendations.

Key Players in Estonia’s AML Regulation

  • Ministry of Finance: Manages overarching AML policies and activities.
  • Estonian Financial Intelligence Unit (FIU): Analyzes and verifies transactions suspected of money laundering and terrorist financing.
  • Obligated Organizations: Must report suspicious transactions to the FIU.
  • Estonian Financial Supervision and Resolution Authority: Ensures adherence to AML requirements.
  • Government Committee: Dedicated to combatting money laundering and terrorist financing.

AML Compliance Obligations

  • AML Compliance Officer: Appointed by regulated organizations.
  • AML Program: Developed by regulated entities.
  • Customer Risk Assessment: Through rigorous CDD and EDD processes.
  • Monitored PEPs: Politically exposed persons should be monitored on PEP lists.
  • Customer Due Diligence: Customer information must be kept for at least five years.
  • Suspicious Activity Reports: Must be filed in suspicious situations.

Penalties for Noncompliance

Penalties for noncompliance are severe:

  • Imprisonment for up to one year or fines ranging from €4,000 to €40,000 for entering into an agreement for the purpose of money laundering.

AML Solutions for Estonian Companies

To enhance their anti-money laundering efforts, Estonian companies can turn to Sanction Scanner for robust AML solutions. Contact Sanction Scanner for more information or request a demo.