Estonia Tightens Grip on Terrorist Financing with New Laws and Guidelines

Combating the Threat of Terrorist Financing

Tallinn, Estonia - In an effort to combat the threat of terrorist financing, Estonia’s financial regulator Finantsinspektsioon has issued new guidelines and advisory documents aimed at ensuring compliance with international standards.

Framework for Credit and Financial Institutions

The guidelines provide a framework for credit and financial institutions to identify and mitigate money laundering and terrorist financing risks. The ‘comply or explain’ principle applies, requiring institutions to either implement the guidelines in full or justify any deviations.

European Banking Authority Guidelines

Finantsinspektsioon has also adopted European Banking Authority (EBA) guidelines as advisory documents, which provide recommendations for financial institutions to prevent the use of their services for money laundering and terrorist financing purposes. These EBA guidelines cover topics such as:

• Customer due diligence
• Risk factors
• Compliance management

Strengthening Estonian Legislation

The Estonian legislation on anti-money laundering and combating the financing of terrorism (AML/CFT) is also being strengthened. The following acts have been amended to bring them in line with European Union regulations:

• Money Laundering and Terrorist Financing Prevention Act
• International Sanctions Act
• Tax Information Exchange Act

EU Legislation and Restrictive Measures

EU legislation has played a significant role in Estonia’s efforts to combat terrorist financing. The 6th Anti-Money Laundering Directive, which came into effect in June 2017, introduced new requirements for financial institutions to identify and report suspicious transactions. The EU’s Common Foreign and Security Policy has also led to the adoption of restrictive measures and sanctions against individuals and entities linked to terrorism.

Financial Intelligence Unit Guidelines

In addition to these guidelines and laws, Estonia’s Financial Intelligence Unit has issued its own set of guidelines for submitting reports and identifying suspicious transactions. These guidelines provide a framework for financial institutions to identify and report suspicious transactions, which are then used by law enforcement agencies to disrupt terrorist financing networks.

International Recognition

Estonia’s efforts to combat terrorist financing have been recognized internationally. The country was removed from the EU’s list of high-risk third countries with strategic deficiencies in its AML/CFT regime in 2019, following significant reforms to its financial regulatory framework.

Conclusion

With these new guidelines and laws in place, Estonia is well-positioned to continue playing a key role in combating terrorist financing and protecting its financial system.