Main theses based on Draft Law on Amendments concerning crypto license in Estonia:
- Application state fee (for crypto license) will increase almost 10 times. Currently it is 345 EUR and in a new law it is 3300 EUR;
- Application review (crypto license) time-frames will increase 3 times. Currently it is 1 month and in a new law it is 3 months;
- Procedure will become more complicated and comprehensive;
- More detailed analysis of shareholders/board members/UBOs will take place;
- Main office and member of the board needs to be physically present in Estonia;
Before the law comes into effect previous requirements and fees are in place. Currently draft law is reviewed by Estonian parliament and there is a possibility that it could come into force mid June-July 2019. Private Financial Services has already developed different solutions for possible changes.
More detailed information about changes
New Laws Target Money Laundering & Virtual Currency Service Providers that the government is on the verge of enacting new legislation aimed at combatting money laundering. The new law will include a number of regulations targeted at virtual currency service providers. The government, intent on combatting money laundering, financing of terrorist activities and other emerging financial related criminal activities, has looked at amendment of existing laws, specifically the Money Laundering and Terrorist Financing Prevention Act of 2017.
The other key financial regulation legislation being amended is the State Fees Act 2015 with a bill intending to do that already in the pipeline. The bill is sponsored by the cabinet minister in charge of finance, Martin Helme. It has specific provisions addressing regulation of virtual currency service providers. The bill proposes the involvement of the Police and Border Guard Board (PPA) Financial Intelligence Unit in the licensing of virtual currency traders including authorizing background checks. Applicant companies looking to open branches in Estonia will also have to undergo scrutiny before authorization is given. Moreover, BNS reports that the fee charged for such authorization has increased tenfold with the applicants now being charged €3,300 in place of €345 they had to part with heretofore.
While at the present it takes about a month for applicants to be authorized to begin providing virtual currency services in Estonia, when the bill is passed it will take three months. Companies currently offering virtual currency services have been given a year’s grace period to be compliant with the new regulations according to reports.
Between the last months of 2018 and early 2019, two major money laundering schemes were uncovered. Investigations showed that between 2007 and 2015, around €230 billion of potentially criminal funds were processed through Danske Bank’s Estonian branch in Tallinn. The Danish bank’s chief executive was forced to resign as the scandal unraveled.
For purposes of the new legislation, the term “virtual currency” has been defined as a value not constituting a recognized national currency and which is represented in digital form. This definition encompasses bitcoin and other cryptocurrency formats which are transferable electronically and exchanged as a store of value by both natural and legal persons as payment instruments. Over the past few years, Estonia has enjoyed a reputation as a dream location where foreign entrepreneurs can set up without much of a fuss. It remains to be seen if the new legislation will dampen this reputation.
Please feel free to contact our specialists to get more information about the law and possible solutions.