400 Crypto Firms Shut Down after new AML law ın estonia
Following the implementation of Estonia’s strengthened Terrorist Financing Prevention and Anti-Money Laundering laws in March, nearly 400 virtual asset service providers (VASPs) either had their authorizations revoked or voluntarily ceased operations.
The updated laws widened the scope of VASPs, necessitated legitimate connections to Estonia, heightened licensing fees, capital and information reporting requirements, and included the Financial Action Task Force Travel Rule.
The Estonian Financial Intelligence Unit (FIU) reported on May 8 that as a result of the March 15 amendment to the AML laws, roughly 200 domestic cryptocurrency service providers have chosen to close their operations.
Another 189 also had their authorizations revoked due to “non-compliance with the requirements.”
Given the documents submitted by the service providers that have lost their authorizations, and their methods of operation and the risks involved, it can be argued that the legislator’s response with regard to the amendments to the Act, and the supervision activities both before and after the amendments, have been relevant.
Matis Mäeker, the director of the Financial Intelligence Unit
And also added:
In renewing authorisations, we saw situations that would surprise every supervisor.
As of May 1, following the significant reduction, the Estonian Financial Intelligence Unit (FIU) reported that there were 100 active crypto firms registered in Estonia.
The FIU identified several common issues among the companies it compelled to close, particularly with regards to inaccurate company details. For instance, some firms had registered board members and company contacts without their knowledge. Other firms had several individuals on their records who had falsified their professional qualifications on their resumes.
Additionally, it seems that many companies had simply copied and pasted identical business plans from one another, which lacked any relationship or coherence with Estonia.
In recent years, Estonia has made a concerted effort to introduce robust anti-money laundering (AML) laws across all sectors. This was primarily prompted by the discovery in 2018 that the Estonian branch of Danske Bank, a Danish megabank, had laundered approximately $235 billion in illegal funds.
Additionally, Estonia’s alliance with the United States in their efforts to “cut off revenues supporting Russia’s war machine and safeguard international financial systems” in the ongoing conflict between Russia and Ukraine has also played a role in pushing for strong AML regulation.
Moreover, Estonia’s membership in the European Union has likely influenced its recent AML law revisions. As a result, it will soon have to implement the forthcoming Markets in Crypto-Assets (MiCA) laws, which are scheduled to take effect in early 2025. These laws will impose rigorous AML and counter-terrorism financing requirements on cryptocurrency firms.
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