The Estonian Money Laundering and Terrorist Financing Prevention Act was amended in January 2020 whereby virtual currency service providers will be treated equally to financial institutions. The amendments are due to come into force on 10th March 2020. The deadline for implementing the changes within existing virtual currency activity license holders is 1st July 2020. The full text in English is available on the following link: https://www.riigiteataja.ee/en/eli/509012020001/consolide
In order to comply with the new regulations, the following becomes compulsory for crypto businesses:
Revision of the internal AML procedures:
- The management must determine whether new business relations are established with persons from outside the European Economic Area or with e-residents;
- Compulsory identification and verification of data with the help of information technology means (specific regulation applies) where a business relationship is established with an e-resident or a person from a country outside the European Economic Area or whose place of residence or seat is in such country (unless it is possible to carry out identification face-to-face);
Appointment of a Compliance Officer:
The Compliance Officer must possess the competence, means and access to relevant information across all the structural units of the business;
Assessment of the experience and business reputation of the management:
The so-called fit & proper test. The Financial Intelligence Unit will require documentation on management’s level of education (at least secondary education), work experience, character and responsibilities of earlier posts, extra training etc. The education, knowledge, experience and skills will be evaluated against the responsibilities and area of activity of the manager in order to assess their capability to understand the risks and carry the responsibility deriving from it. The correct business reputation is presumed until proved otherwise. This is evaluated based on earlier activities such as media coverage, punishments, court dealings, participation in management of companies etc. Reputation is seen as of a more permanent nature than the current checks of the criminal record and therefore it is not subject to legal expiration nuances. The prerequisite for an impeccable reputation is the absence of any circumstance precluding high reputation.
The registered office of the company, the seat of the management board and the place of business must be in Estonia/ foreign company is operating in Estonia through a branch which is registered in the commercial register and has its registered office and head office in Estonia:
- The registered office of the company as seen on the commercial registry is in Estonia;
- The seat of the management board is in Estonia meaning that essential functions of the management and control of money laundering are carried out, including the continuity of functions necessary for the conduct of the business;
- The place of business is the factual location of the business and must include the location of the Compliance Officer. This does not necessarily have to match the registered office address.
Existence of a payment account with a credit institution, an electronic money institution or a payment institution established in Estonia or a Contracting State of the European Economic Area providing cross-border services in Estonia or having established a branch in Estonia.
Share capital of at least EUR 12,000.
The Financial Intelligence Unit will have a legal right to revoke the existing license in case it identifies non-compliance, e.g. that the crypto business does not carry out its activities in Estonia or that its management board is not located in Estonia.