New Anti-Money Laundering Rules for Financial Institutions in Estonia
Enhanced Due Diligence Measures to Combat Money Laundering and Terrorist Financing
The Estonian government has introduced new regulations to prevent money laundering and terrorist financing, aimed at strengthening the country’s anti-money laundering regime. According to the new rules, financial institutions operating in Estonia must apply enhanced due diligence measures when dealing with high-risk transactions or customers.
Criteria for Determining Low-Risk Transactions
Under the new regulations, banks and other financial institutions are required to establish a list of criteria for determining low-risk transactions. This will allow them to use simplified due diligence measures for such transactions. The Minister of Finance has been given the authority to specify these criteria through regulation.
Enhanced Due Diligence Measures for High-Risk Transactions
The rules also introduce enhanced due diligence measures for high-risk transactions, including:
- Transactions involving customers who have not been physically present at the same location during identification and verification
- Transactions where the customer has raised suspicions about the truthfulness of their data or documents submitted
- Additional methods to verify the customer’s identity and authenticate documents must be used in these cases
Definition of Politically Exposed Persons (PEPs)
The regulations define a “politically exposed person” as:
- A natural person who performs prominent public functions, including heads of state, government officials, and members of parliament
- Family members and close associates of such individuals are also considered PEPs
Financial institutions must apply enhanced due diligence measures when dealing with these individuals, which may include:
- Additional methods for verifying their identity
- Authentication of documents submitted
Aim of the Regulations
The new regulations aim to prevent the misuse of financial systems by criminal organizations and strengthen Estonia’s anti-money laundering regime. By introducing these enhanced due diligence measures, financial institutions operating in Estonia will be better equipped to detect and prevent money laundering and terrorist financing activities.