Financial Crime World

ESTONIA’S KNOW YOUR CUSTOMER (KYC) REQUIREMENTS: A GUIDE FOR SERVICE PROVIDERS

Understanding the Importance of KYC Requirements

As a service provider in Estonia, it is crucial to understand the importance of Know Your Customer (KYC) requirements in ensuring the security and credibility of your business. In this article, we will delve into the world of KYC, exploring its significance, the compliance check process, and how to pass pre-opening compliance checks.

The Legislative Framework

The legislative framework governing KYC requirements in Estonia is primarily based on Anti-Money Laundering (AML) and Know Your Customer procedures. AML procedures aim to combat financial cybercrime and identity theft, while KYC focuses on compliance monitoring and risk management.

Designing a Compliance Check

When designing a compliance check, it is essential to consider the following principles:

  • Comprehensive coverage of all concerned parties and risks
  • Proportionality to the size, complexity, and nature of the business

For instance, a small web development contractor may require a simpler check compared to a larger, more complex enterprise.

Pre-Opening Compliance Check

Prior to company incorporation, a pre-opening compliance check is mandatory for physical persons. This process involves:

  • Verifying the user’s identity against their passport or ID document
  • Checking if they are listed on government blacklists, including PEPs (politically exposed persons) and sanctions lists

Simplified Compliance Check Process in Estonia

In Estonia, this check can be completed quickly and easily through specialized services like Sum&Substance, which provides a secure and certified solution. The entire process typically takes only a few minutes to complete.

Company Incorporation

Once the compliance check is passed, entrepreneurs can proceed with company incorporation, which can take as little as one business day for e-Residency card holders or up to two weeks through a notary.

Compliance Verification Options

For those starting their own companies, it may be beneficial to explore software solutions for compliance verifications. However, for smaller businesses, manual compliance checks can be an effective and cost-efficient option.

Conclusion

By understanding Estonia’s KYC requirements and implementing compliance checks, service providers can ensure the credibility of their customers, protect against potential financial risks, and maintain a secure business environment.