The Estonian Government Anti-Money Laundering Commission discussed this week new proposals on how to further strengthen the prevention of money laundering.
The Head of the Commission, Finance Minister Toomas Tõniste said that one initiative that they are proceeding with is a draft law on reversing the burden of proof on unexplained wealth onto the defendant, a significant change in today’s legislation. “This would mean that there is a real danger of losing one’s assets when attempting to launder money through Estonian financial system,” Mr. Tõniste said.
The Minister added, that international co-operation is the key in successful prevention of money laundering. “Also, we have to turn our focus already on new risks and challenges that we are facing internationally, such as crypto assets and payment institutions among others.”
The Commission will next draw up a set of proposals to the Government on strengthening anti-money laundering (AML) legislative measures, which is due to be completed already this month.
The Minister of Finance added that the sound financial environment of Estonia has also been acknowledged by international evaluators, such as the Fitch Ratings agency and the Basel AML Index. “I am glad that our efforts towards creating a stable and transparent business environment are reflected in objective international ratings,” Mr. Tõniste said.
Fitch Ratings upgraded Estonia’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) from “A-“ to “AA-“ on October 5, listing strong governance and institutions, sound policies, credible fiscal framework and stable baking sector among key rating drivers.
According to the recently published 2018 Basel AML Index Estonia ranks second after Finland among 129 countries in terms of low risk of money laundering and terrorist financing, having risen from third place last year. The Basel AML Index is an independent annual ranking that assesses the risk of money laundering and terrorist financing around the world.
The central bank of Estonia, Eesti Pank, regularly monitors and assesses the state of the Estonian banking sector. Eesti Pank considers the financial position of the Estonian banking sector and its resilience to risks to be strong as the quality of the loan portfolio is very good, the level of own funds of the banks is high and loan losses are low. Loans overdue for more than 60 days account for only 0.7% of the total, which is the lowest level of the past 10 years.
The banking sector is mainly funded from the deposits of Estonian residents and the share of deposits from foreign non-financial sector companies and households has fallen steadily. In 2012 they provided 21% of all deposits, but by 2017 that share had fallen to 7%.
The Estonian Government Anti-Money Laundering Commission was formed in 2006. The 14 members of the Commission include the permanent secretaries general of ministries, the heads of the Estonian police, the Estonian Internal Security Service and the Financial Intelligence Unit of the Estonian police as well as representatives of the Financial Supervisory Authority and the central bank of Estonia.