The presence of crypto firms in Estonia shrunk dramatically after stricter regulations were enacted in 2022. In little more than a year, the amended regulations have prompted hundreds of virtual asset businesses to shut shop.
According to a recent press release from the Financial Intelligence Unit of Estonia, the amendments to the country’s Money Laundering and Terrorist Financing Prevention Act have led to nearly 400 crypto firms shutting down their businesses.
Most of the expirations were based on the decision of the regulator. Regardless, almost 200 virtual asset service providers voluntarily had their authorization revoked.
The Financial Intelligence Unit revealed that, as of 1 May, 2023, there were 100 licensed virtual asset service providers operating in Estonia. The new financial regulations caused hundreds of crypto firms to abandon their authorization. The amendments resulted from various lapses identified by the regulator in the conduct of digital asset firms.
Financial Intelligence Unit identified, among other things, persons appointed as members of the management board or as contact persons who were not aware of having been appointed, or whose curricula vitae were falsified or who did not have proper business reputation. The business plans submitted by several companies were identical and lacked any logic or connection with Estonia. In some cases, machine translation of inadequate quality was identified in the documents submitted.
Matis Mäeker, the Director of the Financial Intelligence Unit, said that “In the applications, we found very many suspicious circumstances on various topics. This calls into question the credibility of the companies that wanted to do business here – their actual desire to provide services in Estonia or, vice versa, shows the desire of certain persons to use the Estonian economic and financial system for illegal activities.”
The amendments were part of a broader campaign that Estonian regulators undertook over the past few years to restore the country’s reputation after a high-profile scandal in 2018 involving Denmark’s Dankse Bank. The scandal saw nearly $235 billion in illicit funds laundered through one of the bank’s branches in Estonia.
