Title: Estonia Cracks Down on Money Laundering with New AML Compliance Regulations
Subtitle: Obliged Entities Brace for Stricter Rules to Prevent Money Laundering and Terrorist Financing
October 26, 2017 saw the passing of new Anti-Money Laundering (AML) compliance regulations in Estonia, aiming to strengthen the country’s financial system against illicit activities. This legislation, called the Money Laundering and Terrorist Financing Prevention Act, introduces more stringent measures for various sectors and professionals, enhancing transparency and trustworthiness within the Estonian economy.
Scope of the Act
The Act applies to a wide range of economic and professional activities, including:
- Credit and financial institutions
- Gambling operators
- Real estate traders
- Precious metals dealers
- Auditors
- Trust and company service providers
- Virtual currency exchanges
- Other legal entities
- Notaries
- Attorneys
- Enforcement officers
- Bankruptcy trustees
- Interim trustees
- Providers of other legal services in specific circumstances
Key Provisions of the Act
The main objectives of the Act are to:
- Establish principles for assessing, managing, and mitigating money laundering and terrorist financing risks.
- Provide the Financial Intelligence Unit with adequate supervision over obliged entities.
- Define duties and obligations linked to the collection and disclosure of beneficial owners’ data.
- Impose liability on obliged entities for AML infringements.
The Act also provides definitions for essential terms such as:
- Cash
- Business relationship
- Customer
- Precious stones
- Precious metals
- Virtual currency
Money Laundering and Terrorist Financing Regulations
The Act covers money laundering, which involves converting or transferring assets derived from criminal activity, knowing that they originate from such activities or engaging in such activities. The financing and support of terrorist activities are also addressed.
Impact and Expectations
These new regulations represent a significant step forward in Estonia’s quest to fortify its financial infrastructure against money laundering and terrorist financing. Obliged entities will be tasked with conducting risk assessments, adopting risk management models, and implementing strong internal control guidelines to minimize these risks. The Financial Supervision Authority can review and request obliged entities’ risk assessments, ensuring a robust, well-regulated financial sector in Estonia.
Previously, the country’s business-friendly climate and digitalization attracted international attention, resulting in increased scrutiny from financial regulators. With these measures in place, Estonia hopes to create a secure financial environment that balances its attractive business landscape with strong AML measures.