ESTONIA
Summary
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Sanctions

None

FAFT AML Deficient

No

Medium Risk Areas

Corruption Index (Transparency International & W.G.I.)

Failed States Index (Political Issues)(Average Score)

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Estonia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report (assessment) relating to the implementation of anti-money laundering and counter-terrorist financing standards in Estonia was undertaken by the Financial Action Task Force (FATF) in 2014. According to that Evaluation, Estonia was deemed Compliant for 8 and Largely Compliant for 28 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 1 of the 6 Core Recommendations.

 

US Department of State Money Laundering assessment (INCSR)

Estonia was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

Estonia has a highly developed and transparent banking sector, and its rule of law is recognized as established and mature. Transnational and organized crime groups are attracted to the country for its location between Eastern and Western Europe. Suspicious transaction reports (STRs) show illicit funds from internet crime flowing into Estonia. Online gaming and casinos are both legal in Estonia, although the industry is well-regulated by the Estonian Gambling Act. A review of court decisions related to money laundering show that the most common predicate offenses for money laundering are fraud, computer fraud, and tax-related offenses (both domestic and foreign).

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

70

World Governance Indicator – Control of Corruption

87

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Estonia is a safe and dynamic country in which to invest. The Estonian business climate is very similar to the United States. As a member of the EU, the Government of Estonia (GOE) maintains liberal policies in order to attract investments and export-oriented companies. Creating favorable conditions for FDI and openness to foreign trade has been the foundation of Estonia's economic strategy.

Estonia is among the leading countries in Eastern and Central Europe regarding foreign direct investment per capita. As of the end of 2013, Estonia has attracted in total 20.7 billion USD of investment, of which 24% was made into the financial sector, 16% into manufacturing, another 16% into real estate activities, 13% into wholesale and retail trade and 9% into professional, scientific and technical activities.

The overall freedom to conduct business in Estonia is well protected under a transparent regulatory environment.

The Estonian income tax system, with its flat rate of 21%, is considered one of the simplest tax regimes in the world. Deferral of taxation shifts the time of taxation from the moment of earning the profits to that of their distribution. Undistributed profits are not subject to income taxation, regardless of whether these are reinvested or merely retained.

Estonia offers key opportunities for businesses in a number of economic sectors like ICT, chemicals, wood processing and biotechnology. Estonia has strong trade ties with Finland, Sweden, Russia and Germany.

The main concern is a shortage of labor, both skilled and unskilled. The GOE has recently made amendments to its immigration law allowing easier hiring of highly qualified foreign workers. The problem with unskilled labor is currently addressed at the Ministry of Economic Affairs and Communication as forecasts say that starting in 2016, more people will be leaving the labor market in Estonia than are entering.

While the GOE still seeks to attract foreign direct investment (FDI) into Estonia, finding new export markets for Estonian goods and services is the GOE’s current priority.

 

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FURTHER REPORTS

Republic of Estonia: 2016 Article IV Consultation-Press Release

Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT): MONEYVAL’s report on the 4th round assessment of Estonia adopted in September 2014, which is a follow-up round on the 2003 Financial Action Task Force (FATF) standard, highlighted the authorities’ progress in strengthening the AML/CFT legal and supervisory frameworks, specifically development of a risk-based approach to determine priorities for AML/CFT activities, amendments to the financing of terrorism offence, and the establishment of the Economic Crime Bureau. The report notes some remaining deficiencies, in particular with respect to the sanctioning regime for AML/CFT breaches and the beneficial ownership identification of legal persons. The authorities are addressing these issues, including by preparing amendments to the penal code to allow for “administrative sanctions.” They are also working on ensuring compatibility of the widespread use of information technology and AML/CFT requirements. Regulation has been issued with respect to the e-Residency program, namely with regards to customers’ identification for non-face-to-face opening of bank accounts. As the e-residency program is in its early stages, it will be important to follow up on appropriate safeguards that should be put in place to ensure integrity of the program and limit the potential for abuse. Estonia issued its first regular follow-up report to MONEYVAL in September 2016 and was invited to seek removal from the follow-up process not later than September 2018.

https://www.imf.org/en/Publications/CR/Issues/2017/01/13/Republic-of-Estonia-2016-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-44524

 

20 June 2014  -  OECD:  Estonia needs to promptly address rising foreign bribery risks, says OECD

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