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Estonian Financial Regulator Cancels 500 Crypto firm Licenses to Curtail the Money Laundering Risks

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Jayashree Ingle Follow

INDIA

Aug, 21 2020

Aug, 21 2020

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The Estonian Financial Intelligence Unit (FIU) has canceled 500 cryptocurrency firms’ licenses to minimize the risk of money laundering scams.  

Estonia is among the pioneer countries in Europe which had legalized the use of cryptocurrencies. After legalizing cryptos in 2017, the Estonian FIU had issued more than 1400 licenses, in the last three years. It has now canceled over 500 licenses which is estimated to be 30% licenses.

The FIU has clarified that the move is taken to regulate the crypto industry and to prevent money laundering risks. The FIU is assured that the regulatory restrictions will help to sustain the trust in authorities to tackle money laundering scandals in Europe.

Estonia, a Baltic state in north-eastern Europe, recently got into the public eye after $223 billion money-laundering scam was happened involving Denmark's biggest lender Danske Bank. The Danske Bank was accused of channelizing the laundered money through a small branch in Estonia.

Which Firms were Targeted?

 The Financial Intelligence Unit (FIU) targeted mostly the firms which have failed to operate within six months after issuance of the license. 

While clarifying the stand of FIU, Madis Reimand, Head of Baltic’s Financial Intelligence Unit quoted:

“This is the first step in tidying up the market, allowing us to take care of the most urgent issues by permitting operations only for the companies that can subjected to Estonian supervision and coercive measures.”

The regulator further commented that the Baltic regulatory authorities have learned a lesson from the banking sector and thus wants to concentrate on international financial risks and thus the cryptocurrency industry is on their priority list.

Reimand warned that half of the remaining 900 firms might also be under the hammer of FIU for failing to start operations in Estonia and their managers are outside the country.   

Bill to Regulate the Crypto Industry 

The Estonian government has passed a bill as well that focuses on tightening the criteria for permitting the licenses. According to the new regulations, the license fees has been increased heftily from EUR 345 to EUR 3,300 and the application processing time has also been extended from 30 to 90 days.



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Jayashree Ingle

CBW - External Analyst

INDIA

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