Anti-money Laundering in Estonia

The prevention of money laundering in the Republic of Estonia is done primarily by the Money Laundering and Terrorist Financing Prevention Act.

In the Republic of Estonia the criminal liability for money laundering is described in the Estonian Penal Code’s Division 5: Offences Related to Money Laundering, whereby money laundering is punishable by up to five year’ imprisonment, with a punishment of up to ten years’ imprisonment if done by a group, repeatedly or on a large scale basis.

In the Money Laundering and Terrorist Financing Prevention Act the concept of due diligence is emphasized for those individuals involved in the economic or professional activities, whereby the obligated individuals must pay special attention to the activities of persons that indicate money laundering or terrorist financing. 

The due diligence set of measures in place to prevent money laundering includes:

  1. Procedure for the identification of clients and actual beneficiaries;
  2. Procedure for assessment of clients;
  3. Procedure for assessment of money laundering and terrorism financing risk connected with a client;
  4. Procedure for discovering unusual and suspicious transactions;
  5. Procedures for carrying out transactions with politically significant persons;
  6. Procedure on how to monitor the client’s transactions.

Upon identifying potential money laundering obligated persons must under the Money Laundering and Terrorist Financing Prevention Act contact the Financial Intelligence Unit, which is tasked with ensuring the transparent functioning of the financial sector in Estonia. 

Transactions in which money laundering may occur include:

  1. Buying and selling of immovable property, shares of the commercial company,
  2. Management of the customer’s money, financial instruments and other funds,
  3. Opening or managing of various types of accounts in credit institutions or financial institutions,
  4. Creation, management or provision of operation of legal arrangements, as well as in relation to organisation of contributions necessary for the creation, operation or management of a legal arrangement.

Funds are considered as proceeds of crime if they are owned or possessed by a person as the result of a direct or indirect criminal offence.

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