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Estonia Introduces New Measures to Combat Money Laundering and Terrorist Financing
Strengthening Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Regime
Tallinn, Estonia - In a bid to enhance its anti-money laundering (AML) and countering the financing of terrorism (CFT) regime, Estonia has introduced new regulations aimed at identifying high-risk individuals and entities.
Definition of Politically Exposed Persons (PEPs)
According to the new laws, a “politically exposed person” is defined as a natural person who holds or has held prominent public functions. This includes:
- Heads of state
- Government ministers
- Members of parliament
- Judges
- Senior officials
- Ambassadors
- Envoys
- High-ranking military officers
- Individuals holding positions in international organizations
Definition of Family Members and Close Associates
The regulations also define “family members” of politically exposed persons as:
- Spouses
- Registered partners
- Parents
- Children
- Their spouses or equivalent
Additionally, the laws identify “persons known to be close associates” as those who have:
- Joint beneficial ownership with a politically exposed person
- Close business relations
- Are the beneficial owner of a legal person or trust set up in the interests of a politically exposed person
Obliged Entities’ Responsibilities
The new regulations require obliged entities, such as banks and financial institutions, to:
- Assess their risk appetite
- Determine the types of risks they are prepared to assume
- Identify high-risk individuals and entities
- Apply enhanced due diligence measures for high-risk individuals and entities
Estonia’s National Risk Assessment
Estonia’s national risk assessment will provide guidelines for the application of AML/CFT legislation and regulations, specifying:
- Sectors that pose a higher risk of money laundering and terrorist financing
- Fields and transaction amounts that require enhanced due diligence
- Countries that are considered high-risk jurisdictions
Key Takeaways
- Estonia introduces new regulations to identify high-risk individuals and entities.
- Politically exposed persons, family members, and close associates are defined and included in the list.
- Obliged entities must assess their risk appetite and apply enhanced due diligence measures for high-risk individuals and entities.
- Estonia’s national risk assessment provides guidelines for AML/CFT legislation and regulations.
Sources
- Estonian government website
- Financial Intelligence Unit of Estonia