Compliance guide for regulated crypto companies in Estonia
As the 10th of March approaches the suspense around new requirements for regulated virtual currencies services companies in Estonia grows. What are the new mandatory requirements and what impact it will have on the existing businesses?
Since late 2017 Estonia rapidly became a safe haven for the regulated blockchain projects, amounting in total of over 2500 licenses issued for wallet and exchange activities in a relatively short period of time. During that time we have seen “the good, the bad and the ugly” of blockchain startups. That was the trigger for the government to come up with more strict requirements for the virtual currency services providers. In 2018 the FIU has expressed its concern, and the government acted. New regulation enforces money laundry prevention, tax evasion, continuous and permanent economic activity of the businesses.
Big share of the projects regulated in Estonia have to come to terms, that their licenses will be revoked due to non-compliance with the new regulation.
The main challenge as we (Consulting24) see it, is physical presence requirement. Meaning, the main decisions regarding the activity of the company have to be made by the management in Estonia. Main AML functions have to be carried out in Estonia. AML Compliance Officer has to have an impeccable reputation. Physical office with the equipment has to be located in Estonia. July 1st 2020 is the deadline to “get the affairs in order” and get ready for raids, inquiries, and check-ups.
The new share capital requirement is 12,000 EUR instead of 2,500 EUR, and it has to be paid with monetary contribution to the company’s banking account in European Economic Area (EEA). The company’s banking account could be in a credit, e-money, or payment institution located in EEA, which provides cross-border payments to Estonia or has its branch in Estonia.
Stricter AML/KYC rules will be also required, which equal to the requirements of financial institutions. Anonymous accounts and transactions won’t be allowed. Enhanced due diligence methods have to be applied to the High Risk countries. Business relationship with shell banks and financial institutions will be prohibited.
Crypto to crypto exchanges will get regulated.
Consulting24 team will provide support and guidance for compliance with new regulations. We urge projects to be proactive and get started with preparations asap. It is better to do a bit more than just a minimum requirement.
To get started on your project please send us an inquiry, and we will get back to you very shortly.