Financial Crime World

Estonia’s Financial Crime Legislation: Money Laundering and Terrorist Financing Prevention Act

Passed on October 26, 2017, Estonia’s Money Laundering and Terrorist Financing Prevention Act (MLTFPA) aims to enhance the trustworthiness and transparency of the business environment by preventing the use of Estonia’s financial system and economic space for money laundering and terrorist financing activities.

Key Definitions and Terms

  • Cash: Cash in the European Union (EU) regulatory definition.
  • Property: Any object, right, or document.
  • Obliged Entity: Any person specified in the Act, including credit institutions, financial institutions, and providers of trust and company services.
  • Business Relationship: A relationship established for the provision of services or sale of goods, often with a long-term contract or repeated transactions.
  • Customer: A person with a business relationship with an obliged entity.

Criminal Activities

The act defines and penalizes two primary criminal activities:

  1. Money Laundering: The conversion, transfer, or concealment of property derived from criminal activity, with the intent to disguise its illicit origin.
  2. Terrorist Financing: Financing and support of an act of terrorism.

Specific Definitions and Concepts

  • Virtual Currency
  • Virtual Currency Wallet Service
  • Politically Exposed Person
  • Senior Management of an Obliged Entity
  • Correspondent Relationship

Obligations for Obliged Entities

The Act lays out obligations for obliged entities, including:

  • Risk Management Systems: Establish and implement risk management systems.
  • Customer Due Diligence: Conduct appropriate customer due diligence measures.
  • Suspicious Transactions Reporting: Report suspicious transactions to the Financial Intelligence Unit.

Non-compliance with these regulations can result in severe penalties.

Divisions of the Act

Division 1: General Provisions and Purpose of the Legislation

Division 2: Definitions

Subsequent Divisions: Reporting, Customer Due Diligence, and Administrative Offenses

Administrative Procedure Provisions

The administrative procedure provisions of the Act are applicable, with modifications where necessary.

Conclusion

The Money Laundering and Terrorist Financing Prevention Act in Estonia is a comprehensive piece of legislation designed to ensure a more transparent financial environment, prevent money laundering and terrorist financing, and hold obliged entities accountable for adhering to these regulations.