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Financial Sanctions and Their Impact in Estonia: A Comprehensive Guide

Estonia has a sanctions regime in place, which follows the restrictive measures laid down by the United Nations (UN), the European Union (EU) and other international organizations that are binding on the country. The main legislation for enforcing international sanctions is the International Sanctions Act 2019.

Implementation of Sanctions

The Estonian government does not implement an autonomous sanctions regime, but rather passes international sanctions into law through government acts. For instance, an arms embargo is implemented through the Strategic Goods Act 2011. These acts are proposed by the Ministry of Foreign Affairs.

  • Individuals and legal entities must notify the Estonian Financial Intelligence Unit (FIU) if they know or suspect that someone with whom they are doing business, or are planning to do business, is the subject of an international financial sanction.
  • Some individuals, such as banks, have more onerous obligations to uphold sanctions in order to “draw special attention” and “take measures.”

Lists of Sanctioned Individuals and Entities

Estonia does not maintain a list of sanctioned individuals and entities, but instead relies on UN and EU sanctions lists. However, there are other lists related to sanctions that may be relevant.

Licensing or Authorization System

The country has a licensing or authorization system in place for exemptions from trade sanctions, which can be obtained from the Ministry responsible for administering the sanction. For financial sanctions, prior authorization can be obtained from the FIU. Authorizations or refusals will be based on the conditions of the sanctions themselves.

Consequences of Non-Compliance

Failure to comply with sanctions in Estonia can result in serious consequences, including:

  • Fines
  • Imprisonment for up to five years (Section 931 of the Estonian Penal Code)
  • Where a transaction breaches the International Sanctions Act or legislation based upon it, the transaction is void, unless an exemption is available and retrospective authorization is granted. In such cases, the transaction becomes effective from the moment the authorization is granted.

Appeals Process

Individuals against whom Estonian authorities implement international sanctions have recourse through the Administrative Court.

Relevant Regulators

The relevant regulators in Estonia include:

  • Ministry of Foreign Affairs
  • Police and Border Guard Board
  • Ministry of Economic Affairs and Communication
  • Ministry of the Interior
  • FIU
  • Tax and Customs Board

Contact information for these agencies can be found below.

Conclusion

Overall, Estonia’s sanctions regime is designed to ensure compliance with international obligations while also providing a framework for exemptions and authorizations where necessary. As such, it is essential for businesses operating in Estonia to understand the sanctions landscape and comply with relevant regulations to avoid serious consequences.