Estonia’s efforts to prevent money laundering have led to a significant drop in the number of registered cryptocurrency firms in the country. The Financial Intelligence Unit, the country’s money laundering regulator, recently reported that the number of active authorizations for virtual assets service providers has reduced to 100.
The report further stated that the validity of 389 authorizations has expired. The decrease is due to the implementation of the Money Laundering and Terrorist Financing Prevention Act, which came into effect on March 15, 2022.
Controversial Law
The law was implemented to prevent money laundering scandals and crypto scams and to repair Estonia’s reputation. However, it has forced the voluntary closure of 200 crypto firms, while the regulator has revoked 189 due to non-compliance with the new regulations.
Compliance Issues
According to the Director of the Financial Intelligence Unit, Matis Mäeker, many of the firms submitted their applications using the same legal or company services providers. In addition, there were identical business plans by applicants, management board members who were unaware of their appointments, falsified CVs, and other issues.
Supervision
The regulator is expected to continue reviewing authorizations and return to “normality in terms of supervision” in the future. The report noted that the supervisory activities before and after the amendments have been relevant and necessary.
Estonia’s Friendly Stance to Crypto
Estonia is one of the most friendly countries for tech startups, including crypto firms. The new law aims to enhance the country’s reputation by ensuring that companies are adequately regulated to prevent money laundering. However, it has led to the exodus of cryptocurrency firms from the country.
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