The majority of crypto companies attracted by the once favorable Estonian regulations have either abandoned or lost their licenses. According to the latest numbers released by the Baltic nation’s anti-money laundering bureau, only 100 businesses are currently authorized to provide digital-asset services.
A total of 389 authorizations issued by the Estonian government to virtual-asset service providers are no longer valid, the country’s Financial Intelligence Unit (FIU) announced this week. As of May 1, 2023, there were 100 active authorizations, the bureau said on Monday.
Estonia attracted hundreds of crypto firms with its business-friendly climate before it decided to stiffen rules for the industry with amendments to the Money Laundering and Terrorist Financing Prevention Act that came into force in March 2022. These include higher capital requirements for wallet, exchange, and custody platforms.
The licenses have been canceled either by the FIU or at the request of the holders, a press release noted. “Following the entry into force of the enhanced requirements … service providers abandoned nearly 200 authorizations. In addition, the FIU revoked almost the same number of authorizations due to non-compliance,” the agency detailed.
“In renewing authorizations, we saw situations that would surprise every supervisor,” commented FIU Director Matis Mäeker. Among other issues, the unit identified persons on managerial and other positions that were not aware of having been appointed, as well as individuals with false professional resumes.
The business plans submitted by several companies were identical, the regulatory body also pointed out. Others lacked any connection to Estonia, in breach of another of the new requirements. The applications of many of these platforms were submitted by the same legal firms.
“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,” Mäeker elaborated.
“The Financial Intelligence Unit will continue reviewing authorizations and exercising continuous supervision in the field of money laundering and terrorist financing prevention, which is the only way to identify certain deficiencies,” the bureau insisted. When Mäeker assumed his post at its helm in the summer of 2021, there were almost 650 licensed crypto-service providers in Estonia.
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