The new money laundering regulations conveyed by the Estonia regulator revealed several issues involving the local crypto firms. The regulator observed the existence of dodgy executives and reliance on nonsensical business plans.
Amending Anti-Money Laws Compels Hundreds of Crypto Service Firms to Close Shop
Over 400 firms that held the virtual asset service provider license have announced shutting down operations. The voluntary closure coincides with the government resolution to revoke the authorizations of the crypto firms. The mass shutdown is attributed to Estonia’s move to enhance its Terrorist Financing Prevention and Anti-Money Laundering laws (AML) approved in March.
The mass shutdown has become necessary for crypto firms following the amendment of AML to expand VASPs scope compelling firms to obtain legitimate links to Estonia jurisdiction. Also, the new provisions increase the license fees and capital requirements. Additionally, it introduces the Financial Action Task Force Travel Rule.
Voluntary Shutdown Dominate as Local Crypto Companies Exit Estonia
The statement conveyed on May 8 by the Estonian Financial Intelligence Unit (FIU) indicates that the March 15 approval of AML laws led 200 domestic providers of crypto services to voluntarily terminate operations. FIU stated it revoked the authorizations of 189 firms citing noncompliance with the new requirements.
FIU director Matis Mäeker lauds the supervision process concluded as outlined in the amended Act as relevant in identifying the documents furnished by service providers whose authorizations were revoked. He considers the amendment delivering needed teeth to smoke out concealed risks and operation methods.
Mäeker indicates that the legislator’s response is aligned with the objective of the amendment designed before the amendments. He confesses that the review of applications submitted by VSAPs illustrated deficiencies that would shock the supervisors.
FIU Screening Clears VSAPs Found with Misleading Information
Mäeker observes that the heavy clear-out reduced the active crypto firms to 100 that are fully compliant as of May 1. FIU director outlined several of the general issues among the VSAPs forcibly shutdown as providing misleading information.
FIU screening revealed some firms submitted lists of board members and contacts without the consent and awareness of the actual individuals. The scrutiny revealed some firms included falsified profiles and professional experience on their resumes.
Mäeker wondered why the crypto service firms utilized identical business plans. He concluded possible copying of the business plans, a reason several lacked logical links with Estonia.
Estonia Aligns its AML Laws with MiCA
Estonia is portraying a concerted effort to implement the AML laws across the board in recent years. The country’s efforts are inspired by the 2018 discovery of $235 billion in illicit capital lauded via the Estonian unit of Denmark Danske Bank.
The implementation of amended AML in Estonia is partially motivated by the ongoing Russia-Ukraine war. Estonia is seeking to cut off the conduit of money destined to finance Russia’s war machine through tighter AML regulation being a strategic partner of the US.
Also, Estonia implemented the amended AML laws given its active EU membership. It implies that Estonia is set to embrace the EU Markets in Crypto Assets (MiCA) laws as they become effective. The amendment of AML borrows a leaf from the provisions enshrined in the upcoming MiCA laws. Estonia targets crypto service providers to comply with the stringent AML and antiterrorism requirements.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.