Financial Crime World

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Estonia’s Financial Sanctions Regime Under Scrutiny: FATF Report Reveals Compliance Issues

A recent report by the Financial Action Task Force (FATF) has shed light on Estonia’s compliance with global financial sanctions regimes. The report assesses the country’s implementation of technical requirements related to anti-money laundering and combating terrorist financing.

Compliance Status

According to the report, Estonia is partially compliant in several areas:

  • Assessing risk and applying a risk-based approach (R.1)
  • National cooperation and coordination (R.2)
  • Confiscation and provisional measures (R.4)
  • Targeted financial sanctions related to terrorism and terrorist financing (R.6)
  • International instruments (R.36)

However, Estonia was found to be largely compliant in areas such as:

  • Money laundering offence (R.3)
  • Customer due diligence (R.10)
  • Record keeping (R.11)
  • Regulation and supervision of financial institutions (R.26)

The country was also deemed non-compliant in a few areas:

  • Higher-risk countries (R.19)
  • New technologies (R.15)

Areas for Improvement

The report highlights several areas where Estonia needs to improve, including:

  • Implementation of effective internal controls and foreign branches and subsidiaries (R.18)
  • Regulation and supervision of designated non-financial businesses and professions (DNFBPs) (R.23)
  • Transparency regarding beneficial ownership of legal persons and legal arrangements (R.24 and R.25)

Recommendations

The FATF report recommends that Estonia take steps to address these compliance issues to prevent the misuse of its financial system for illicit activities.

Response from Estonian Authorities

Estonia’s authorities have welcomed the report and pledged to work towards implementing the recommended reforms. The country has made significant progress in recent years to strengthen its anti-money laundering and combating terrorist financing regime, but there is still more work to be done to ensure full compliance with international standards.