Financial Sanctions Warrant Improvement in Estonia, Says MONEYVAL Report

Estonia has been praised by the Council of Europe’s MONEYVAL committee for its efforts to combat money laundering and terrorist financing, but significant improvements are still needed. According to a report published on January 25, the country must strengthen its law enforcement efforts, improve its understanding of risks, and enhance cooperation between authorities.

Areas Requiring Improvement

• Private Sector Understanding: Estonia’s private sector has been found to have a superficial understanding of money laundering (ML) risks, particularly among virtual assets service providers and company service providers.
• Competent Authorities Integration: The country’s competent authorities have not fully integrated the results of nationwide risk assessment exercises into their objectives and activities.

Praise for Efforts

• International Cooperation: Estonia has been commended for its substantial level of effectiveness in international cooperation.
• Financial Intelligence: The use of financial intelligence has also been praised.
• Implementation of UN Sanctions: Estonia’s implementation of United Nations targeted financial sanctions on proliferation financing has been recognized.

Recommendations for Improvement

• Estonian Financial Intelligence Unit (EFIU): MONEYVAL recommends that the EFIU improve its proactive approach in detecting ML/TF targets and enhance its capacities and working practices.
• Supervisory Authorities: Supervisory authorities should strengthen the implementation of preventative measures in the private sector.
• Supreme Court Interpretation: The Supreme Court’s interpretation of the ML offence needs to be reviewed, as it has led to a relatively low number of identified and investigated cases.

Concerns

• Access to Beneficial Ownership Information: Estonia’s ability to access information on beneficial ownership and prevent misuse of legal persons is a concern.
• Dual Criminality Principle: The country has reserved the right to refuse assistance based on the dual criminality principle with regard to non-EU countries, which may hinder international cooperation.

Conclusion

While Estonia has made progress in combating money laundering and terrorist financing, significant improvements are still needed to bring its regime in line with international standards. MONEYVAL’s recommendations aim to address these deficiencies and enhance the country’s effectiveness in this area.