In a report published today, Council of Europe’s anti-money laundering body MONEYVAL encourages Estonia to further strengthen measures to combat money laundering (ML) and financing of terrorism (FT), among others by re-enforcing the capacities and performance of the private sector and improving its law enforcement efforts in this field. The report provides a comprehensive assessment of the country’s level of compliance with the recommendations of the Financial Action Task Force (FATF) as at the date of the onsite visit in May 2022.
MONEYVAL acknowledges that the country has demonstrated a substantial level of effectiveness in international cooperation, use of financial intelligence and implementation of the United Nations targeted financial sanctions on proliferation financing. The report finds that further improvements are needed in enhancing the understanding of ML/TF risks, effectiveness of ML and TF investigations and prosecutions, confiscation of proceeds of crime, implementation of targeted financial sanctions on TF, application of AML/CFT preventative measures by the private sector, supervision and transparency of beneficial ownership of legal persons and legal arrangements.
MONEYVAL acknowledges that Estonia has an appropriate mechanism for identification, assessment and, subsequently, understanding of ML/TF risks. While the achieved results provide useful hints on sectors with higher risk exposure, they do not give a fully sufficient view of the risk environment.
Estonia is commended for co-ordination and co-operation between the Estonian Financial Intelligence Unite (EFIU) and the law enforcement authorities (LEAs). At the same time, the report finds that the EFIU should reinforce proactive detection of ML/TF targets. More efforts are required in improving interpretation of the ML offence and investigating and prosecuting ML in line with the risk in the country. LEAs and prosecutors are expected to enhance their efforts in dealing with complex types of ML, also where legal persons and company service providers (CSPs) are involved and misused. Estonia needs to enhance to a major extent its efforts to seize, confiscate and recover the proceeds of ML and predicate offences, especially those moved abroad, in line with its ML/TF risks.
MONEYVAL noted that the authorities undertake investigations into TF and achieved a conviction, which demonstrates authorities’ skills and knowledge to deal with the TF offence. Nevertheless, those efforts need to be further enhanced in line with improved understanding of national TF risks, and the effectiveness of criminal sanctions should be improved.
There was significant improvement achieved in implementation of preventative measures over the assessment period as a result of focused supervisory actions. The report concludes that currently, the understanding of ML/TF risks is good in the banking sector. Virtual assets service providers (VASPs) and CSPs demonstrated a superficial understanding of ML risks to which their individual businesses are exposed. Understanding of TF risk is generally lower across all sectors. Banks and VASPs have a generally good understanding of their AML/CFT obligations, while CSPs - to a lesser degree. Hence, further continued efforts of the supervisory authorities in strengthening the implementation of preventative measures by the private sector are still expected.
Beneficial ownership (BO) information on legal persons is available to competent authorities, but the measures in place do not fully enable availability of adequate, accurate and current BO information. The large share of Estonian companies with e-Residents as their basic or beneficial owners, significant involvement of licensed and non-licensed CSPs in the company registration processes, coupled with poorly designed and vaguely understood CDD measures implemented by them, are factors with adverse impact on the quality of BO information. Applicable sanctions are not effective.
Finally, the report concludes that although there are some technical and procedural constraints, Estonia provides generally timely and constructive assistance across the range of requests for international co-operation, including mutual legal assistance.
Estonia is subject to MONEYVAL’s enhanced follow-up reporting process as a result of the report.

• Link to the report