Changes in Estonian AML law and effect to “crypto companies”

On 11.12.2019. Estonian Parliament in the third reading approved changes in Money Laundering and Terrorist Financing Prevention Act (further AML law).

As of today (12.12.2019) the FIU has issued 1070 virtual currency wallet service provider licenses and 1175 virtual currency exchange licenses. All of the license holders will be directly affected by the changes in the AML law. If your company has a “crypto license in Estonia”, then we suggest to read this article and learn about upcoming changes.

Changes in AML law will be in force from March 10, 2020.

• Companies who have licenses will have a transition period until July 1st, 2020 to implement required changes.

Licenses will be merged in to 1 general license.

• The new name shall be “Virtual currency service provider” license.

State fee for virtual currency service provider license EUR 3300.

• Until March 10, 2020 the state fee remains EUR 345 per license. If your company is able to follow all requirements and you would like to apply for the license, then we suggest applying until March 10, 2020.

Share capital for virtual currency service providers EUR 12 000.

• Share capital minimum EUR 12 000 is one of the prerequisites to obtain the license.
• Companies who have licenses at the moment, will have to increase their share capital up to EUR 12 000 until July 1st, 2020.

Physical presence in Estonia.

• Company’s registered office, board’s location and place of establishment is in Estonia.
• Requirement of registered office and place of establishment can be interpreted in a way that the company’s key personnel is located and operates in Estonia, also the company must have a physical office room in Estonia.

Bank account in EEA registered institution.

• All license holders will have to maintain an account at financial service provider which is registered in EEA.

Sound commercial reputation for Member of the board.

• The law grants the controlling authority to determine the reputation of member of the board and based on that reject / grant virtual currency service provider license.

Statement under oath about absence of criminal records.

• In situations where it is not possible to obtain country — wide statement of absence of criminal records (like it is with the USA citizens), it will be possible to submit statement under oath made at the notary in Estonia claiming that member of the board is absent of criminal offences.
• This gives possibility to companies with UBO’s / Members of the board to apply for the license. So far it wasn’t possible to obtain the license for US citizens just because of this reason, however, now it will become possible.

These are some of the most important changes which will affect all current and future “crypto license” holders in Estonia. There are several other changes with regards to “risk appetite”, KYC measures, access to e-Residency data base, cooperation with shell banks, etc.

If you wish to find out more about the new requirements, contact me and I will be happy to speak with you.