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Estonia’s New Anti-Money Laundering Laws May Clamp Down On Digital Assets Industry

The latest Estonian guidelines are reported to stretch out the definition of the service providers of virtual assets by including ICO, DApps, and similar services. Estonia is prepared to incorporate significant modifications to the legal description of the VASPs (Virtual Asset Service Providers) by an additional inclusion of crypto-related services, a step by which the BTC (Bitcoin) ownership could be influenced across the country, as per Sumsub (a Europe-based compliance specialist).

On 21st September, the Finance Ministry of Estonia issued a draft bill for the update of the Money Laundering and Terrorist Financing Prevention Act (also called the AML Act) being included in the endeavors of the authorities of the country to confront terrorist financing and money laundering. As reported by Sumsub, the interagency review procedure of the legislation is currently in its midst, with the implementation specified to take place in 2022’s February. Regulated firms of crypto have time till 18th March of the next year to be in line with the compliance of the proposed regulations.

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As per the CEO of New DeFi – Mikko Ohtamaa – the modified law efficiently prohibits non-custodial wallets, as well as the products related to decentralized finance, throughout the country. That is due to VASPs being the focus of the bill with the addition of crypto wallets and exchanges in Estonia. On the bill’s readiness, VASP will widen the span to take account of decentralized venues, initial coin offerings (ICOs), and the rest of the related services. The provisions’ violation may infer a penalty of between $452,000 and 400,000 euros.

As per the interpretation of Ohtamaa, the latest law has the impact that the consumers are just permitted to hold their BTC in a custodial VASP (Virtual Asset Service Provider). VASP is capable of freezing the account of the consumers signifying that the customers do not have complete autonomy over the BTC holdings thereof.

Estonia was considered to be among the earliest countries (across European Union) which have provided authorization for the crypto businesses, however, it was compelled to execute a crackdown following the discovery of several hundred billion dollars in illegal money in Danske Bank, placing Estonia in the center of largest money-laundering catastrophe across Europe.

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It was formerly reported that the Estonia-based Financial Intelligence Unit’s head – Matis Mäeker – suggested the authorities of the country in October to eliminate the rules and initiate licensing freshly. He emphasized that the common public does not know about the inherent hazards involved in crypto trading, particularly in the case of its function in terrorist financing and money laundering along with the weakness against cybercriminals.


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Mubashar Nawaz (United Arab Emirates)

Mubashar Nawaz is an experienced crypto writer working for Tokenhell. Having passion for writing, he covers news articles from blockchain to cryptocurrency.

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