Financial Crime World

ESTONIA: Banks Emphasize Compliance with Good Banking Practice

In an effort to promote transparency and fair competition, Estonian credit institutions and branches of foreign credit institutions have adopted the Good Banking Practice (GBP), a set of principles aimed at ensuring the reliable functioning and good reputation of the entire banking system.

History of GBP

Approved by the Board of the Estonian Banking Association in 1996, updated in 2011 and 2017, GBP outlines the key principles that banks must adhere to in their daily operations. The guidelines emphasize the importance of transparency, professionalism, and compliance with laws and regulations.

Key Principles

  • Transparency: Banks must organize their activities in a transparent and conscientious manner.
  • Professionalism: Bank employees must be suitable and sufficiently well-trained for their positions.
  • Compliance: Banks must abide by internal rules and agreements between banks and customers, as well as ensure that all employees are informed of these rules to perform their work effectively.

Additional Emphases

  • Prevention of Money Laundering and International Sanctions: Banks must implement measures to prevent money laundering and comply with international sanctions.
  • Promoting Positive Developments in Estonian Society: Banks should contribute to the growth of the Estonian economy and promote positive developments in Estonian society.
  • Financial Literacy and Education: Banks are expected to support financial literacy and education for customers.

Relations between Banks and Customers

  • Mutual Propriety, Honesty, and Trust: Bank employees must take into account the needs of each specific customer and provide sufficient information about bank services, risks, and fees.
  • Resolving Complaints: Banks are expected to resolve complaints in a constructive atmosphere and ensure that all bank employees who have contact with customers are aware of the rules for lodging and reviewing complaints.

Internal Rules

  • The Banking Association has established internal rules regarding:
    • Lodging of complaints by customers
    • Procedures for reviewing complaints
    • Deadlines for doing so
  • Terms for reviewing and replying to complaints must be reasonable, and banks must ensure that customers have access to information regarding whom to contact for extrajudicial solutions if they are not satisfied with the outcome of an in-house proceeding.

Banking Secrecy

  • Banks must treat all customer information as confidential and implement effective measures for its protection.
  • Banks may only disclose banking secrets to third parties with a customer’s permission or in cases provided by law.

Conclusion

By adopting GBP, Estonian credit institutions have demonstrated their commitment to transparency, accountability, and compliance with laws and regulations. The guidelines serve as a benchmark for best practices in the industry, promoting fair competition and protecting the interests of customers and stakeholders alike.