Estonia is preparing new laws against money laundering
Starting in February, Estonia will make drastic changes to its definition of Virtual Asset Service Providers or VASPs, to include more services regarding cryptocurrencies – a move that could affect the holding of Bitcoin (BTC) in the country – according to the Sumsub, the European compliance specialist.
On September 21, the Estonian Ministry of Finance published a draft law updating the law on the Prevention of Money Laundering and Terrorist Financing (AML) as part of the government’s effort to prevent money laundering and terrorist financing.
As reported by Sumsub, the legislation is now in the process of inter-agency review, with implementation being set for February 2022. The crypto-regulated companies have until March 18, 2022 to bring their operations and documents into compliance.
According to New DeFi CEO Mikko Ohtamaa, the updated law will effectively ban noncustodial software portfolios and decentralized financial products in the country. This is due to the fact that the provisions of the bill apply to VASPs, which include various cryptocurrency exchanges and other wallets. When the bill will be ready, VASP will be expanded to cover decentralized platforms, initial coin offerings, and other services. Violation of the provisions can lead to huge fines that can reach up to 452,000 USD or 400,000 EUR.
According to Ohtamaa’s interpretation, the new law has the following effect: “You are only allowed to keep your Bitcoin in a Virtual Asset Service Provider (VASP) escrow. VASP may freeze your account. Therefore, it is no longer effectively your Bitcoin.”
Estonia was one of the first countries in the European Union to license its cryptocurrency business, but it had to recover after hundreds of billions of dollars of dirty money were discovered in Danske Bank, placing Estonia at the center of the largest money laundering issues in Europe.
According to Cointelegraph, Matis Mäeker, who is the head of Estonia’s Financial Intelligence Unit (FIU), has asked the government in October to “reset the rules and start licensing again”. He also said that the general public was unaware of the inherent risks of cryptocurrencies, especially with regard to its alleged role in money laundering and terrorist financing, as well as the vulnerability of the industry to cyber attacks.
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