Estonia’s recent amendments to its anti-money laundering (AML) laws have resulted over 300 virtual asset service providers (VASPs) either ceasing operations or have their licenses revoked. The amended laws included the adoption of the Financial Action Task Force Travel Rule, which broadened the definition of VASPs, increased information reporting requirements, and raised license fees and capital requirements.
The Estonian Financial Intelligence Unit (FIU) revealed that almost 200 domestic crypto service providers voluntarily closed down since the new AML laws came into force on March 15, 2023, while authorizations for 189 companies were revoked for non-compliance. The Estonian regulator added that as of May 1, 2023, only 100 active crypto companies were registered in Estonia following the clear-out.
Matis Mäeker, the director of the Estonia Financial Intelligence Unit, praised the effectiveness of the government’s response to the amended laws and its supervision activities, noting that the risks associated with the service providers who lost their authorizations justified the government’s actions.
The FIU discovered several issues within the businesses shut down, including cases of false corporate information. Some businesses registered board members and company contacts without their knowledge or consent, while employees of these businesses had falsified their professional histories on their resumes. In addition, several companies had copied and pasted identical business plans from one another, which were irrelevant and had no connection to Estonia.
Estonia has taken significant steps to implement robust AML regulations in recent years, primarily influenced by the Danske Bank money laundering scandal in 2018 and the country’s alliance with the US, as well as the ongoing conflict between Russia and Ukraine.
As a member of the European Union, Estonia is also will be required to implement the upcoming Markets in Crypto-Assets (MiCA) legislation, set to take effect in early 2025. This legislation is expected to impose stringent AML and terrorist prevention standards on cryptocurrency enterprises.
The European Parliament finally put the Markets in Crypto-Assets Act (MiCA) to a final vote onApril 20, 2023 vote, after two delays. However, the regulation only will become law if the European Council adopts it. The MiCA, first introduced in 2020, has been described as a pivotal moment for the crypto asset market by Stefan Verger, the MiCA’s rapporteur and a member of the European Parliament.
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