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Estonia

Last Updated: 28/05/2008

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)

  • Financial Intelligence Unit – can only make recommendations, guidelines that are not obligatory.
  • Ministry of Interior
  • Ministry of Finance

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:

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:

  1. Upon establishment of a business relationship
  2. Upon entering into transactions exceeding 200,000 kroons (about €12,800)
  3. Upon suspicion of money laundering or terrorist financing
  4. Upon the insufficiency or incorrectness of documents or data gathered in the course of identification and verification of a person

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:

  1. a person participating in a transaction has been identified and verified without being present
  2. 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
  3. 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:

  1. Alegal person governed by Estonian public law
  2. An Estonian government authority or an authority performing public functions in Estonia or a contracting state of the European Economic Area (EEA)
  3. An authority of the European Community
  4. 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
  5. 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.

To be provided once Estonia's guidelines for lawyers have been issued.

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:

  1. The purchase or sale of immovables, enterprises or companies;
  2. The management of a customer’s money, securities or other property;
  3. The opening or managing of bank or security accounts;
  4. The acquisition of funds necessary for the foundation, operation or management of companies;
  5. 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 §34(4) of the Act, “attorneys are not subject to the notification obligation arising from subsections (1) and (3) when evaluating a 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, regardless of whether the information has been received before, during or after 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

To be provided once Estonia's guidelines for lawyers have been issued.

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE

§ 13(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

To be provided once Estonia's guidelines for lawyers have been issued.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

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 evaluation has been conducted.

Information provided by:
Marin Vallikivi
Lawyer
Estonian Bar Association
marin.vallikivi@advokatuur.ee

 

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