Last Updated: 08/03/2011
CENTRAL AUTHORITY FOR REPORTING
The Estonian Financial Intelligence Unit (FIU) is an independent structural unit of the Central Criminal Police.
ANTI-MONEY LAUNDERING REGULATOR(S)
HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?
Yes – Implemented by the Money Laundering and Terrorist Financing Prevention Act 2007 upon its adoption on 19 December 2007.
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
Yes, lawyers who are associated members of the Estonian Bar Association and lawyers of a foreign state that have notified the Estonian Bar Association that they are practicing law in Estonia are subject to the same obligations as Estonian lawyers.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE
In January 2008, the Financial Intelligence Unit published two sets of advisory guidelines to provide assistance in detecting the particular types of transactions for which reporting is required:
In 2008, the Management Board of Estonian Bar Association published two guidelines for lawyers:
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
Yes, the Board of the Estonian Bar Association is the supervising body for lawyers.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS
Under §12 of the Act, due diligence must be applied:
Upon establishment of a business relationship
Upon concluding or intermediating transactions on an occasional basis, while the value of the transaction exceeds 15 000 euro or an equal amount in another currency, regardless of whether the financial obligation is performed in a lump-sum or in several related payments, unless otherwise provide by law.
Upon suspicion of money laundering or terrorist financing regardless of any derogations, exemptions or limits specified by law
In the event of insufficiency or suspicion of the correctness of the documents or data gathered earlier in the course of identification and verification of a person or updating the respective data.
Using documents and data submitted by the subject person, an attorney must verify the identity of his/her client or a person involved in the transaction through information from a reliable independent source. This includes verifying the identity and right of representation of agents of the subject person. Additionally, an attorney must identify the beneficiary of a transaction, acquire information concerning the business relationship or purpose of a transaction, and regularly monitor and verify information relating to an ongoing business relationship.
If necessary to avoid interruption of the normal course of professional activities and if the risk of suspicious activity is low, attorneys may verify the required identities while establishing a business relationship or entering into a transaction so long as they are verified as soon as possible and prior to the performance of any binding acts.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
An attorney must apply the measures provided in § 13(1) of the Act, but may exercise discretion regarding the scope of application based upon the nature of the transaction or risk level of the person involved.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Enhanced due diligence measures shall be applied if:
a person participating in a transaction has been identified and verified without being present
suspicion arises as to the truthfulness of data or authenticity of documents submitted during the identification and verification process or when a beneficial owner has not been identified
a person participating in the transaction is a politically exposed person, or a family member or close associate thereof, from a contracting state of the EEA or a third country.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Under § 18(1) of the Act, simplified due diligence measures may be applied if the client entered into the transaction under economic or professional activities or in an official act and the client is:
Alegal person governed by Estonian public law
- An Estonian government authority or an authority performing public functions in Estonia or a contracting state of the European Economic Area (EEA)
- An authority of the European Community
- A company of a contracting state of the EEA or a company of a third country which is subject to requirements equal to those in the Act and whose securities are traded in a regulated securities market in at least one contracting state of the EEA
- A credit or financial institution, a credit or financial institution located in a contracting state of the EEA or a third country, which in the country of location is subject to requirements equal to those provided for in the Act and the performance of which is subject to state supervision.
The criteria for determining “low risk” of money laundering or terrorist financing for the purposes of applying simplified due diligence measures is governed by Finance Ministry regulations.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
According to Act § 28 (1, 2) if the person with a notification obligation has transferred its activities to a third party for better compliance with the obligations related to its economic or professional activities, then the third person shall be deemed to have knowledge of all the requirements resulting from Act. The person with a notification obligation having transferred its activities shall bear liability for any violations of these requirements.Transfer of activities shall be permitted only if:
it does not damage the justified interests of the person with a notification obligation or the person participating in a transaction;
it does not hinder the activities of the person with a notification obligation nor the compliance with the obligations provided for in this Act;
it does not hinder the conducting of state supervision over the person with a notification obligation;
the third party taking over the activities has the necessary knowledge and skills and the ability to comply with the requirements specified in this Act;
the person with a notification obligation has the right and possibility of verifying the compliance of the third party with the requirements specified in this Act;
it is ensured that the documents and data collected for compliance with the requirements specified in this Act are preserved pursuant to the procedure provided for in this Act and in legislation based upon it.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
The Act applies to notaries public, attorneys, bailiffs, trustees in bankruptcy, interim trustees in bankruptcy and providers of other legal services if they act in the name and on account of a customer in financial or real property transactions. Th[e] Act also applies to the specified persons if they guide planning a transaction or perform an official act, which concerns:
The purchase or sale of immovables, enterprises or companies;
The management of a customer’s money, securities or other property;
The opening or managing of bank or security accounts;
The acquisition of funds necessary for the foundation, operation or management of companies;
The foundation, operation or management of trusts, companies or other similar entities.
Money Laundering and Terrorist Financing Prevention Act, 2007, § 3(2)
An obligated person who knows or has reason to suspect that identified activities are money laundering or terrorist financing must immediately notify the FIU of such activity. The FIU must also be notified if an obligated person is prohibited under the Act from entering into a business relationship or conducting a transaction because of a client’s failure to produce adequate documents requested under the obligated person’s due diligence requirements. Additionally, the FIU must be notified of any cash transaction involving over 500,000 Kroons (about €32,000).
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
Under §27(5) of the Act, “The provisions of subsections (1) to (3) do not apply to notaries public, attorneys, bailiffs, trustees in bankruptcy or other legal service providers or to auditors and persons providing accounting or tax advice when evaluating the customer’s legal position, defending or representing the customer in court, challenge or other such proceedings, including providing the customer with consultations regarding the initiation or avoidance of proceedings..”
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
Under § 35(1) of the Act, an attorney will not be liable for damages arising from failure to enter into a transaction if the damages were caused to the person in connection with the attorney’s good faith notification to the FIU of a suspicion of money laundering or terrorist financing.
Under §35(2), the good faith performance of the notification obligation under §32 is not considered a violation of the confidentiality requirement provided by either law or contract.
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
The lawyer may proceed. Consent from authorities is not required
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
Under §34(1) of the Act, an obligated person may not notify a person, a person’s representative/agent, or the beneficial owner about notification given to the FIU, precepts made by the FIU, or the initiation of criminal proceedings. Notification may be given that the FIU has restricted the person’s accounts in some way and also may be given to third parties under certain circumstances.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT
If satisfactory identification and verification of the identity of a new client as set out in the Act is not possible, no client relationship may be established and no services may be provided.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE
§ 13(1) p 5 of the Act requires “constant monitoring of a business relationship, including monitoring transactions entered into during the business relationship, regular verification of date used for identification, updating relevant documents, data or information and, if necessary, identification of the source and origin of funds used in the transaction.”
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION
Information and documents pertaining to the identification and verification of a client must be retained in a reliable manner for five years from the termination of the client relationship.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
Information not publicly available
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
No mutual evaluation has been conducted by FATF.
In 2008, the Committee of Experts on the Evaluation of Anti-Money Laundering Measure and the Financing of Terrorism (MONEYVAL) conducted a Third Round Detailed Assessment Report on Estonia evaluating its anti-money laundering and combating the financing regime based on FATF’s 2003 40+9 Recommendations. The report concluded that Estonia complies with an overwhelming majority of the FATF’s 40+9 Recommendations. The report went further to claim that Estonia has achieved a sound legal and institutional AML/CT regime.
Regarding DNFBPs regulation, supervision, and monitoring, the 2008 MONEYVAL mutual evaluation questioned the sufficiency of both, supervisory resources and mechanism.
In 2009, the Committee of Experts on the Evaluation of Anti-Money Laundering Measure and the Financing of Terrorism (MONEYVAL) adopted a progress report at MONEYVAL’s 31st
Plenary meeting (Strasbourg, 7-11 December 2009).
Information provided by:
Estonian Bar Association
Estonian Bar Association