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New law reinforces fight against money laundering

4. July 2007 - 0:00

The Ministry of Finance has submitted the draft Money Laundering and Terrorist Financing Prevention Act, which will introduce two EU directives on the prevention of money laundering into Estonian law, for the first round of approval.

“Adopting the draft would help us fight money laundering and the funding of terrorism more effectively,” explained Minister of Finance Ivari Padar. “Both of these are growing problems in the world at the moment and affect all of us. It’s vital too that preventing these crimes defends the trustworthiness of Estonia’s economic space as a whole.”

Should the draft enter force, the range of individuals obliged to implement the requirements of the Money Laundering and Terrorist Financing Prevention Act within their economic and professional operations will broaden.

These will be banks and all other companies providing financial services, organisers of gambling, individuals involved in the brokerage of real estate, pawnbrokers, auditors and those offering accounting services or advisory services. Also included will be merchants who receive more than 200,000 kroons (or another currency) in cash and in certain cases notaries, lawyers, bailiffs, trustees in bankruptcy and other providers of legal services.

The draft more precisely regulates the operations of these obligated individuals in identifying and running checks on the other party in a transaction or the individuals or clients involved in an official transaction than the current law.

A new requirement is that obligated individuals, barring credit institutions, must inform the money laundering data office of every transaction, whether in cash or equivalent, of 500,000 kroons or more.

A significant change established in the draft is the mandatory registration of entrepreneurs in the register of economic activities. All financial service providers who are not subject to the supervision of the Financial Inspectorate must register themselves in this way under the draft law. Those offering SMS loans are also among those who must register themselves.

The need to regulate the prevention of money laundering and the funding of terrorism with a separate act is a result of the danger represented by these crimes. Attempts to hide the origins of money obtained through crime or to finance terrorist activities could put the trustworthiness and stability of credit and financial institutions at risk, lead to wavering trust in the financial system and damage the national economy as a whole.

The new directives must be adopted by member states by 15 December 2007.

For more details see: Background to the draft Money Laundering and Terrorist Financing Prevention Act (04.07.2007)

For further information please contact:

Annikky Lamp
Ministry of Finance
Communications Department
Telephone: +372 611 3577
Mobile: +372 52 97 656

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