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New Regulations for Credit Institutions: Enhanced Due Diligence Measures for Low-Risk Transactions
The Estonian government has introduced new regulations aimed at preventing money laundering and terrorist financing in the country’s financial sector. According to the new rules, credit institutions operating in Estonia will be required to implement enhanced due diligence measures when dealing with transactions that pose a low risk of money laundering or terrorist financing.
Simplified Due Diligence Measures
The regulation allows for simplified due diligence measures to be applied in cases where the annual total value of financial obligations arising from transactions does not exceed €200,000. This is intended to reduce the burden on credit institutions while still ensuring that necessary measures are taken to prevent financial crimes.
Enhanced Due Diligence Measures
In cases where there is a high risk of money laundering or terrorist financing, credit institutions will be required to apply enhanced due diligence measures. These measures include:
- Identifying and verifying individuals through additional documents, data, or information from reliable sources
- Verifying the authenticity of documents and data
Politically Exposed Persons
The regulation also defines politically exposed persons (PEPs) as natural persons who hold prominent public functions, as well as their family members and close associates. Credit institutions will be required to apply enhanced due diligence measures when dealing with PEPs from other Member States or third countries.
Implementation
The new regulations are expected to come into force on [date] and will apply to all credit institutions operating in Estonia, including branches of foreign credit institutions registered in the country. The regulation is aimed at strengthening Estonia’s efforts to combat money laundering and terrorist financing, while also ensuring that financial transactions are conducted securely and efficiently.
Responsibility
Credit institutions will be responsible for properly applying the enhanced due diligence measures required by the new regulations. Failure to comply with these measures may result in penalties or other legal consequences.
The introduction of these new regulations is a significant step forward in Estonia’s efforts to prevent financial crimes and maintain a stable and secure financial system.