estonia - Pwim.Net

Estonia Revokes 500 Crypto Business Licenses in a Move Against Illegal Money Laundering Activities

According to a Bloomberg report, Estonia has revoked licenses from 500 crypto companies. This is an estimate of 30% of the entire number of approved crypto companies in the country. Regulatory authorities embarked on such a massive action as part of combating illicit financial transactions after Danske Bank was associated with a $220 billion money-laundering scandal.

The regulator has crypto in its sights

Madis Reimand, the Head of the Estonian Financial Intelligence Unit (FIU), said that the crackdown was a pre-emptive strike meant to clean up the crypto industry. The FIU is responsible for the issuance of licenses. Reimand mentioned that the idea is not to ban the crypto sector at all, but rather to tighten regulations so that to prevent risks connected with money laundering.

The regulator has shut down firms that failed to begin operations in the country within six months of obtaining a license.

Reimand stated: “This is a first step in tidying up the market, allowing us to take care of the most urgent issues by permitting operations only for companies that can be subjected to Estonian supervision and coercive measures.”

The massive crackdown comes after Danske Bank, Denmark’s largest lender, was facing allegations of being involved in a money-laundering scandal. The bank was accused of facilitating $223 billion of laundered money through its branch in Estonia. The scandal exposed core flaws in the authorities, thus forcing them to turn attention to cryptocurrency companies, a sector regarded as high risk.

Until now Estonia has been a haven for cryptocurrency firms. The nation is among the first countries in Europe to liberalize cryptocurrency in 2017, licensing over 1,400 companies within three years.

But regulatory authorities have become stricter to curtail international risks associated with money laundering. Recently the Estonian parliament passed a law, which makes it difficult to get a crypto license.

The new regulations state that permits will now be given after three months at a cost of €3,00 ($3,715). In the past, it took 30 days to get the same license for €300. Crypto firms registered in Estonia will also have to register their entities operating outside the country. Reimand warned that more than 50% of the remaining crypto firms may lose their license because they have no operations in Estonia and their managers are outside of the country.

FinCen Director warns crypto firms are not above anti-money laundering laws

Last year, FinCen (The United States Financial Crime Enforcement Network) director, Kenneth Blanco, blasted crypto companies by warning crypto-related businesses that they are not exempted from the AML (anti-money laundering laws). He emphasized that fintech companies that provide currency users anonymity are subject to the same regulations as traditional companies. His comments seemed to target crypto companies that provide anonymous payment services that could hide intended criminal activities.

Thanks to blockchain innovation. In recent years, cryptos have exploded in popularity. Startups have raised millions of dollars to issue digital currencies in exchange of money. Anyone with a digital wallet and an internet connection can be a part of a coin sale business startup. That leaves plenty of opportunities for people to commit financial terrorism activities or launder money, especially in nations where corruption is rampant.

Estonia's Central Bank Launches Research Project into CBDC

Following the European Central Bank’s assessment into the potentials of issuing a Central Bank Digital Currency, Estonia’s Central Bank also known as Eesti Pank has launched a multi-year research project into central bank digital currencies.

According to Eesti Panks, the research will be carried out in partnerships with the technology companies Guardtime and The SW7 Group will help the bank to understand how technologically suitable the Estonian e-government core technology (the KSI Blockchain) is for operating a central bank digital currency.

Head of the Payment and Settlement Systems Department of Eesti Pank Rainer Olt:

“Eesti Pank as a small central bank chooses carefully which Eurosystem development projects we are able to contribute to meaningfully. Estonia has over the years developed a unique know-how in running a digital government that prioritizes security, privacy, and efficiency. This experience gives us good grounds for launching a project to explore the technological frontiers of digital money with the technology companies SW7 and Guardtime. Guardtime is the Estonian government’s long-term blockchain partner and is a global leader in its field.”

As a multi-year project, Eesti Pank noted that the research project will be conducted in multiple phases over the course of two years. The apex bank only gave a detailed overview of what the first phase will entail and noted that it will focus on determining “how to architect a scalable, practically useable, and cryptographically secure platform to meet the needs of a central bank digital currency, including stringent requirements for speed, security, privacy, and resilience.”

The European Central Bank is optimistic about the issuance of a central bank digital currency as well as in clamping down on illicit cryptocurrency transactions as is becoming commonplace within the 27-member bloc, a move Eesti Panks is strictly conforming to. By continually rallying other members of the bloc towards CBDC research in their respective countries as in the case of Eesti Panks, the European Central Bank hopes to unleash the power of the Euro in the shortest possible time.

Crypto Alert: Revolutionary DGT Token Community Presale

Tallinn, Estonia, 8 January 2021 DGBLabs OÜ, announces it Community Presale of the DataGrid Token (DGT) for 22nd – 26th January offering a 5% bonus, which is reduced 1% a each day during the sale, on a minimum of one quarter ETH at the price of $.005. Higher Bonus levels available for purchases over 80 ETH. Participants will be required to complete WhiteListing on Blockpass prior to the sale date.

This sale of the DataGrid Token is for an erc20 token which will be exchanged 1:1 when the DataGrid Blockchain mainnet is launched. Details of the entire presale can be found on https://www.dgblabs.io where interested token purchasers can begin the WhiteList process.

The DataGrid Blockchain (DGB) will offer scaling beyond other blockchains, achieved through our eXtensible Blockchain Object Model (XBOM). XBOM will deliver full parallelization by allowing us to store state in accounts and move accounts across shards, so as more nodes are added throughput increases in speed to the maximum transaction rate allowed by the bandwidth of the internet.

“DataGrid Blockchain will be easy to develop for, like creating a mobile app, enabling great user experiences that happen to be on the blockchain,” said Michael Holdmann, Founder and Chief Executive Officer. “DGB will make development of applications 100x faster and easier to maintain.”

DataGrid Blockchain designed with an efficient hybrid Distributed PoW/PoS consensus that will deliver the highest resistance to attack.

“If you have the fastest, easiest to develop for, and most secure blockchain driven by a steady currency, wouldn’t you expect that to deliver high returns?” asked, Jay Moore, Co-Founder and Chief Marketing Officer.

About: DGBLabs OÜ is an Estonian private limited company coordinating the DataGrid Token sale. The token is not for sale to residents of the USA or any jurisdictions that restrict the purchase of cryptocurrency. About: Blockpass is a unique, reusable digital identity (DID) solution for any organizations that participate in regulated industries and in the increasingly remote business environment where trust needs to be verified digitally.

Image source: DGB Labs

Estonia to Strengthen Supervision of Virtual Asset Service Providers

Estonia has recently considered enacting new rules on encryption and proposed draft legislation that will strengthen the supervision of virtual asset service providers, but it has not made the possession of encrypted currency illegal.

The Estonian government today approved the proposed rules of the December 23, 2021, draft. It must now pass the parliament before it can be implemented in the first half of 2022.

The bill aims to regulate encrypted entities or virtual asset service providers (VASP), such as traditional financial institutions and payment platforms, to reduce financial crimes.

According to regulations, virtual asset service providers that facilitate virtual asset transactions must identify their customers and companies that do not have any physical business operations in Estonia are not allowed to obtain a VASP license.

The new regulations enable VASP to meet higher standards of anti-money laundering clauses, which are further increased on the basis of Estonia’s 2020 ban on opening anonymous virtual accounts.

Concern about the prohibition of owning cryptocurrency or non-custodial wallets have been expressed and the Estonian government holds no intention to prohibit the digital assets.

The government document explained that:

“This means that the legislation does not contain any measures prohibiting customers from owning and trading virtual assets, nor does it require customers to share their wallet private keys in any way.” “Individuals are still free to use non-custodial wallets.”

As reported by Blockchain.News on June 15, 2020, Estonia has revoked licenses from 500 crypto companies as part of combating illicit financial transactions after Danske Bank was associated with a $220 billion money-laundering scandal. This is an estimate of 30% of the entire number of approved crypto companies in the country.

This was the biggest black money scandal in European history at the time.

So far, about 400 licensed companies remain.

Estonia Shuts Down Crypto Firms

In recent news, Estonia has strengthened its Anti-Money Laundering laws and almost 400 virtual asset service providers (VASPs) have shut down as a result. The amended laws expanded the defined scope of VASPs and increased licensing fees, capital requirements, and information reporting requirements. Additionally, the laws introduced the Financial Action Task Force Travel Rule. The Estonian Financial Intelligence Unit (FIU) announced that almost 200 domestic crypto service providers voluntarily shut down, and another 189 had their authorizations revoked due to non-compliance.

The FIU’s director, Matis Mäeker, noted that the response from the legislator and the supervision activities have been relevant, given the documents submitted by the service providers that lost their authorizations and their methods of operation and risks involved. The FIU also found several general issues within the companies it shut down, including misleading company information. For instance, some companies had registered board members and company contacts without their knowledge, while others had falsified professional backgrounds on their resumes. Additionally, many companies had copy-pasted identical business plans from each other, which were also found to be lacking any logic or connection with Estonia.

Estonia has made significant efforts to implement strong AML laws, primarily due to the discovery in 2018 that around $235 billion worth of illicit capital had been laundered through the Estonian branch of Denmark megabank Danske Bank. The ongoing war between Russia and Ukraine has also had an impact, as Estonia has pushed to cut off revenues supporting Russia’s war machine and protect international financial systems via strong AML regulation as part of its partnership with the U.S. Estonia is a member of the European Union and will soon have to implement the upcoming Markets in Crypto-Assets (MiCA) laws that are slated to come into effect in early 2025. Under MiCA, crypto firms will be subject to stringent AML and terrorism prevention requirements.

In conclusion, Estonia has taken significant steps to ensure the implementation of robust AML laws. The recent enhancement of AML laws has resulted in the closure of nearly 400 crypto firms in Estonia. The FIU found several issues with the companies it shut down, including misleading company information. As a member of the European Union, Estonia will soon have to implement MiCA laws, which will require crypto firms to comply with stringent AML and terrorism prevention requirements.