Estonia to set up center for strategic monitoring to better combat money laundering

TALLINN – The Estonian governmental committee on combating money laundering and terrorist finance decided on Monday in favor of the establishment of a center for strategic analysis that would operate under the Financial Intelligence Unit.

Finance Minister Toomas Toniste said that the governmental committee discussed the proposals set forth by work groups on the basis of a report presented by the committee at the end of last year, spokespeople for the Ministry of Finance said. 

"One of the most important decisions was the one to establish a center for strategic monitoring and analysis. As also the lessons of the past have shown, capacity for analysis is one of the key matters in the successful prevention of money laundering alongside international cooperation and rapid information exchanges," Toniste said. "The center will get access to the databases and registers of different institutions and the developing of smart IT solutions in particular will be a very important component in this."

The second important portion of the proposals again had to do with the hedging of risks related to virtual currency service providers, in order to be able to cope with new international risks and avoid undermining the good digital image of the Estonian state internationally. In the issuance of activity permits, an increase in the size of the state fee, an annual license fee, a requirement for company headquarters and physical domicile in Estonia, evaluation of the background of the owners and introducing the informing obligation are being weighed. 

The minister added that in the work groups also the establishment of a common body for supervision over the prevention of money laundering and terrorist finance on the level of the EU was discussed.

"For the establishment of a cooperative institution like this there was support on the condition that the institution will not be limited to the role of a supervisor or supervisors, so to speak, but would also have the powers to make decisions," Toniste said.

The governmental committee on combating money laundering and terrorist finance at the end of last year presented an in-depth analysis and proposals for making the prevention of money laundering more effective. The proposals concerned both the  institutional and the legislative framework.

The committee set up two expert work groups, one of which dealt with the institutional network, including the analysis and   monitoring system, cooperation and resources, while the other dealt with the legislative framework having to do with supervision and punishments. With some of the proposals the committee can move forward right away, while others need additional analysis and work with them will continue. 

The topics that are to be moved forward with are the concept of administrative fines, and the regulation of whistleblowers in the financial sector needs to be specified. The present sanctions for breaches represent a major bottleneck, as they are not proportional with the violations and need to be made harsher. 

The goal is that punishments in the field of finance were harsher, proceedings simpler and whistleblowers more protected. 

The necessary amounts of financing from the state budget will be presented once they have been specified. In addition to the applications to be filed, 500,000 euros will be allocated in additional resource to the prosecutor's office and the Financial Intelligence Unit .

Plans also are to move forward with the legislative changes to make combating money laundering more effective which have been drafted by the governmental committee and approved by the government already, but were dropped from the agenda of the outgoing parliament due to procedural rules. The amendments will toughen the rules for the issuance of virtual currency permits, introduce the requirement of reverse burden of proof and toughen punishments in the field of finance.