The amendments to the Money Laundering and Terrorist Financing Prevention Act (MLTFPA) in Estonia were adopted by the Estonian parliament on 11 December 2019, and entered into force on March 10th 2020.
Who is concerned?
The Act aims to provide more transparency in business activities and involve cryptocurrency activities. These amendments impact primarily the providers of cryptocurrency services, named ‘‘virtual currency service’ (aka. VCS). VCS is defined as follow:
- ‘Virtual currency wallet service’: a service in the framework of which keys are generated for customers or customers’ encrypted keys are kept, which can be used for the purpose of keeping, storing and transferring virtual currencies;
- ‘Virtual currency exchange service’: a service with the help of which a person exchanges a virtual currency against a fiat currency or a fiat currency against a virtual currency or a virtual currency against another virtual currency.
What are the keypoints?
- Virtual Currency Services need to get an authorisation to operate;
- The previous two different licenses are merged into one authorisation covering the two services;
- Crypto-to-crypto exchange should be regulated as well (in the past only crypto-to-fiat and fiat-to-crypto exchanges were regulated);
- The required minimum share capital of the company has increased from 2 500 euros to 12 000 euros;
- Services need to prove existing bank account in an European Economic Area (EEA);
- Physical presence in Estonia is required, which includes the local office, local management board member(s) and compliance officer who should hold Estonian residency;
- Stricter due diligence of the management board members and compliance officer: documentation is required regarding education, resume, reputation etc;
- Updates on the AML and KYC internal procedures, which is now equal to those of financial institutions.
What is the deadline to meet the new requirements?
Virtual currency service providers should comply with the amendment no later than July 1st July with the following process: submit an authorisation application to the regulator Financial Intelligence Unit (FIU) with all supportive documentation proving you check the boxes. If it fails to do so within the time limit, its authorisation will be revoked by FIU.
How can Scorechain help?
New requirements on the AML and KYC internal procedures require cryptocurrencies service companies to review and amend their rules of procedures and internal control rules. For example they should identify and verify the identity of a customer or a person participating in the transaction before providing any services.
Regarding the AML compliance procedures, Scorechain can help with this part. As the top cryptocurrency AML solution provider, Scorechain provides monitoring tools that cryptocurrency service providers need, to comply with any upcoming regulations. Basically it helps cryptocurrency businesses to implement their compliance policy and enhance due diligence controls for transaction monitoring and suspicious activities reporting.
With a transparent risk-assessment methodology, a unique scoring system, full customization and reporting features, Scorechain Analytics is trusted by worldwide customers from 29 countries, including major cryptocurrencies companies and financial institutions such as OTC trading desks, ICOs, private banks, audit firms, and custodians.
Following AMLD5 Requirements
This law update follows the AMLD transposition. Indeed, January 10, 2020, was the date for European Union members to give force the directive by passing appropriate implementation measures. Cryptocurrency businesses need to be compliant on that date.
You can read more on AMLD5 here: https://blog.scorechain.com/5-things-to-do-for-cryptocurrency-businesses-to-be-amld5-compliant/
You are a cryptocurrency service provider in Estonia looking for an easy and trusted AML solution to fulfill compliance requirements? Please feel free to contact us for more information: email@example.com We will be glad to help!