Around 400 Crypto Firms in Estonia Closes Amid AML Crackdown

• Around 200 domestic crypto service providers have voluntarily ceased.
• Over the last few years, Estonia has made a concerted effort to adopt robust AML measures.

Nearly 400 virtual asset service providers (VASPS) in Estonia have either voluntarily shut down or had their licenses canceled. This is post the government’s new, stricter Terrorist Financing Prevention and Anti-Money Laundering rules (AML) went into effect in March.

The Financial Action Task Force Travel Rule was implemented. Moreover, the definition of VASPs was broadened, Estonian connections for businesses were mandated, licensing costs were raised, and new reporting standards were established.

Non-Compliance With the Requirements

The Financial Intelligence Unit (FIU) of Estonia reported on May 8 that around 200 domestic crypto service providers have voluntarily ceased following the modification to the AML legislation on March 15.

The reasons given for revoking the permissions of another 189 were “non-compliance with the requirements.” The FIU reports that as of May 1, after the massive purge, there were 100 active crypto companies registered in Estonia. The FIU brought attention to many systemic problems it discovered at the firms it closed down involuntarily. Most notably false or deceptive corporate information.

Some businesses, for instance, had board members and firm contacts listed who were not aware that they were included. Many persons were employed by rival firms despite their having fabricated professional histories on their resumes.

Business proposals from many firms were discovered to be almost similar and devoid of “any logic or connection with Estonia.” Over the last several years, Estonia has made a concerted effort to adopt robust anti-money laundering measures across the board. The 2018 revelation that around $235 billion in illegal funds had been laundered via the Estonian branch of the Danish megabank Danske Bank is largely responsible for this.