Anno 2020: money laundering rules are tightening in Estonia

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2 min readSep 10, 2020

What is exactly changing?

Until 2020 and 2021, a number of important changes will remain in the Money Laundering and Terrorist Financing Prevention Act (RahaPTS), which cryptographic companies must take into account and bring their activities into line with. There has been a lot of talk about money laundering scandals that have ravaged Estonian banks, but their actions by the legislator regarding business related to virtual currencies may have overshadowed them.

On March 10 2020, the version of RahaPTS entered into force, which introduced new requirements for obligated parties. For companies already holding a license, the deadline for complying with the new requirements was set at 1 July 2020. The main changes were to combine the provision of a virtual currency exchange service and the provision of a virtual currency wallet service into one license for virtual currency service providers.

The main change must be the location and place of business of the legal person providing the service in Estonia and this must be indicated in the company’s articles of association, commercial register and register of economic activities. In practice, this also means that a member of the management board must actually manage the activities of the association from Estonia, for example by having an Estonian residence. Persons who are members of the management body, procurators, shareholders and beneficial owners must submit identity documents, documents proving the absence of punishment, as well as prove their correct reputation. An important point is that virtual currency service providers must open a payment account with a credit institution, electronic money institution or payment institution — this change significantly facilitates the activities of companies that previously had difficulty opening a bank account in Estonia. The share capital requirement of virtual currency service providers increased to 12,000 euros, which must be paid in full in cash. From now on, virtual currency service providers will have to draw up risk appetite and risk assessment documents, which were not previously mandatory.

Procedurally, the procedural deadline is now 60 days instead of the previous 30 days, which can be extended to 120 days at the discretion of the RAB. The state fee for applying for an activity license also increases from 345 euros to 3,300 euros.

Previously, licenses related to Estonian virtual currency services were very popular among foreigners, including especially e-residents, precisely because Estonia’s progressive image and openness to new technologies highlighted our business environment among other countries. At the same time, for example, site and payment account requirements may hinder the activities of companies previously interested in the Estonian environment.

As the statutory deadline for companies already licensed to bring their operations in line with the new requirements was 1 July 2020, it is not yet known how many companies either closed down or made the necessary changes by the deadline.

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