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Estonia Introduces Simplified Identification Measures for Financial Transactions
Tallinn, Estonia - The Estonian government has introduced new regulations aimed at simplifying identification measures for financial transactions. Effective May 18th, credit institutions, financial institutions, and other obligated persons may use digital identification documents to verify the identity of natural persons without being physically present.
New Regulations
The new regulations, outlined in sections 13-18 of Estonia’s Money Laundering and Terrorist Financing Prevention Act, apply to transactions involving payments within Estonia with a total value per calendar month not exceeding €2000. In such cases, obligated persons may rely on digital identification documents issued by the Republic of Estonia to verify the identity of individuals participating in the transaction.
Simplified Due Diligence Measures
The regulations also provide for simplified due diligence measures for obligated persons operating in low-risk sectors, such as:
- Gaming companies
- Insurance companies
These measures allow for reduced identification requirements when dealing with customers or beneficiaries in these industries.
Currency Exchange and Payment Services
In addition, the new regulations specify that:
- Providers of currency exchange services must identify and verify all parties involved in transactions exceeding €6400 in cash or an equal amount in another currency.
- Providers of payment services must identify all customers making or receiving money transfers through their service.
Compliance Oversight
The Estonian Financial Supervision Authority will oversee compliance with these regulations, which aim to strike a balance between ensuring the prevention of money laundering and terrorist financing while also reducing bureaucratic burdens on financial institutions.
Key Takeaways
- Credit institutions, financial institutions, and other obligated persons may use digital identification documents for transactions within Estonia with a total value per calendar month not exceeding €2000.
- Simplified due diligence measures are allowed for obligated persons operating in low-risk sectors, such as gaming and insurance companies.
- Providers of currency exchange services must identify and verify all parties involved in transactions exceeding €6400 in cash or an equal amount in another currency.
- Providers of payment services must identify all customers making or receiving money transfers through their service.
Conclusion
The new regulations aim to streamline financial transactions while maintaining robust anti-money laundering and terrorist financing prevention measures.