Estonia should continue strengthening the capacities and performance of the private sector and improve its law enforcement efforts in combating money laundering and terrorism financing

MONEYVAL has published the 5th round Mutual Evaluation Report (MER) on Estonia summarising the anti-money laundering counter financing of terrorism (AML/CFT) measures in place in Estonia as adopted by the MONEYVAL Committee at its 64th Plenary Session (5-8 December 2022).
CONSOLIDATED ASSESSMENT RATINGS
The updated Consolidated assessment ratings provide an up-to-date overview of all assessed countries concerning the effectiveness and technical compliance with the FATF Recommendations, using the FATF Methodology together with the FATF 4th Round Procedures. These ratings should be read in conjunction with the detailed Mutual Evaluations. All these documents are available on the FATF website. The FATF 40 Recommendations can have one of the following five settings:
C (Compliant)
LC (Largely compliant – There are only minor shortcomings)
PC (Partially compliant – There are moderate shortcomings)
NC (Non-compliant – There are major shortcomings)
NA (Not applicable – A requirement does not apply, due to the structural, legal or institutional features of the country)
Notable current characteristics and changes compared to previous reports on both effectiveness of Anti-Money Laundering/Combating Financial Terrorism (AML/CFT) systems as well as technical compliance with the FATF Recommendations are the following:
Estonia
R.2 (National cooperation and coordination) rated at C
R.4 (Confiscation and provisional measures) rated at C
R.9 (Financial institution secrecy laws) rated at C
R.11 (Record keeping) rated at C
R.16 (Wire transfers) rated at C
R.30 (Responsibilities of law enforcement and investigative authorities) rated at C
R.31 (Powers of law enforcement and investigative authorities) rated at C
NOTE: All other ratings are either only rated at PC or LC. Please directly consult the latest version of the corresponding Consolidated assessment ratings table available as PDF or XLSX in conjunction with our own analysis below for more granular details.
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ESTONIA’S 5TH ROUND MUTUAL EVALUATION REPORT DECEMBER 2022
This report provides a summary of the anti-money laundering and combating financing of terrorism (AML/CFT) measures in place in Estonia as at the date of the onsite visit (25 April to 6 May 2022). It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of Estonia’s AML/CFT system and provides recommendations on how the system could be strengthened.
Estonia has an appropriate mechanism for identification, assessment and, subsequently, understanding of ML/TF risks through national risk assessments coordinated by the AML/CFT Committee with high-level commitment and nationwide coverage, access to all data available in the country from public and non-public sources.
Estonia should be commended for the demonstrated practice of co-ordination and co- operation between the Estonian Financial Intelligence Unit (EFIU) and LEAs, and the EFIU’s efforts to meet the operational needs of the LEAs. At the same time, some of the EFIU’s practices raise concerns in terms of revealing the operational work done by the EFIU in respect to suspicious transactions and thereby jeopardizing the detection of crime and the tracing of assets.
While some significant cases involving banks are currently ongoing, the number of identified and investigated ML cases is relatively low mainly due to the limited interpretation of the ML offence by the Supreme Court. The criminal sanctions applied for the ML offence call into question their dissuasiveness and effectiveness given the gravity and associated risk. Confiscation is recognised as a policy objective in Estonia, but the achieved results follow the set objectives to some extent. Estonia implements the UN TFS on TF and PF without delay.
The EFIU’s actions implemented in 2021 appear to have a positive impact on Virtual Assets Service Providers(VASPs) licensing processes. The supervisory activity was not always carried out on a risk-sensitive basis. The powers to sanction unlicensed activity and to impose financial sanctions are limited. Overall, the applied sanctions cannot be considered to be effective, proportionate and dissuasive.
MLA and extradition to EU and non-EU MS is provided in a constructive manner. Estonia has reserved the right to refuse assistance due to the principle of dual criminality, which hinders cooperation with non-EU jurisdictions.
In sum, Estonia currently has no NC ratings, R.(2,4,9,11,16,30,31) are rated at C, and all other ratings are either PC or LC.
Estonia is subject to the enhanced follow-up procedure due to the results of this report.