Financial Crime World

Preventing Money Laundering and Terrorist Financing in Estonia: A Multi-Faceted Approach

Introduction

The Financial Action Task Force (FATF) plays a crucial role in preventing money laundering and terrorist financing in Estonia, with the Ministry of Finance taking the lead in setting general policy, legislation, and coordinating activities to combat these crimes.

Estonia’s Anti-Money Laundering Framework

  • The Estonian Financial Intelligence Unit (FIU) is an independent government authority that analyzes and verifies information about suspected money laundering or terrorist financing, taking measures to preserve property as necessary and forwarding materials to competent authorities upon detection of criminal offenses.
  • The Prosecutor’s Office, Security Police, Tax and Customs Board, and courts work together to identify criminals and establish legal liabilities.

Strengthening the Financial Sector

  • The Financial Supervision Authority ensures the stability, reliability, and transparency of Estonia’s financial sector by exercising supervision in areas related to money laundering and terrorist financing.
  • A governmental committee for coordinating money laundering prevention, chaired by the Minister of Finance, brings together representatives from various ministries, law enforcement agencies, and financial institutions to promote anti-money laundering efforts.

Raising Awareness and Encouraging Participation

  • The Advisory Committee of Market Participants, serviced by the Ministry of Finance, channels information and enhances communication between market participants, raising awareness and giving entrepreneurs a chance to contribute to legislative development.
  • The committee comprises representatives from associations of entrepreneurs and other obligated persons.

Citizens’ Role in Preventing Money Laundering

  • Estonia’s Anti-Money Laundering and Terrorist Financing Prevention Act requires obligated persons (including banks, financial service providers, and real estate agents) to report cash transactions above €15,000 or equivalent value.
  • The law also applies to notaries, lawyers, bailiffs, and other professionals who may encounter suspicious transactions.

Registration Requirements

  • Entrepreneurs must register in the Register of Economic Activities and provide identification information for natural persons or legal representatives.
  • Financial institutions under supervision by the Financial Supervision Authority have additional reporting obligations.

International Cooperation

  • Estonia is a member of international organizations dedicated to combating money laundering and terrorist financing, including:
    • The Financial Action Task Force (FATF), an inter-governmental body developing and promoting national and international policies to combat these crimes.
    • Moneyval, which evaluates anti-money laundering measures and counter-terrorism financing in Council of Europe member states.

National Risk Assessment

  • The National Risk Assessment 2020 highlights the importance of continued efforts to strengthen Estonia’s anti-money laundering framework.
  • The assessment identifies areas for improvement, including:
    • Enhancing customer due diligence
    • Improving cooperation between financial institutions and law enforcement agencies