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More stringent requirements for cryptocurrency undertakings

Riigikogu has finished the first reading of new draft Money Laundering and Terrorist Financing Prevention Act (MoneyLPA) and draft State Fees Act Amendment Act (8 SE I), which should be considered by so-called cryptocurrency undertakings authorised to operate in the area of providing services of exchanging a virtual currency against a flat currency or providing a virtual currency wallet service, or undertakings applying for such authorisation.

Equivalent to financial institutions

While the providers of services related to aforesaid virtual currencies are not considered financial institutions pursuant to section 6 of currently valid MoneyLPA, the draft act prescribes treating them as financial institutions. According to the explanatory memorandum, this is due to the fact that according to case-law, the providers of alternative payment service (i.e. those who allow payment in virtual currency) are deemed equivalent to classical financial institutions. There has also occurred a dramatic increase in the risk level of money laundering and terrorist financing prevention with regard to significant interest of non-resident cryptocurrency undertakings in Estonian cryptocurrency authorisation.[1] In terms of MoneyLPA, this means in particular that as financial institutions, the so-called cryptocurrency undertakings are required to ensure that their internal rules of procedure comply with the guidelines of Estonian and EU supervisory authorities, appoint a compliance officer established in MoneyLPA, terminate relationships with shell banks and identify customers in accordance with the provisions of MoneyLPA.

New requirements

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