The regulation and supervision of providers of virtual currency-related services continuously requires heightened attention, the deputy secretary general of the Estonian Ministry of Finance and deputy head of the government committee for the prevention of money laundering and terrorist financing has said.
Speaking a meeting of the committee on Wednesday, deputy secretary general Veiko Tali said: “We must keep an eye on new technological developments and mitigate the money laundering risks relating to them.”
He added that entrepreneurs’ interest in licences for virtual currency service provision was high last year, and a large number of such authorizations were issued.
The state’s supervision of service providers and its options for intervening meanwhile was limited. This year, amendments tightening the issuing of such activity licences entered into force, and developments in the area are now moving in the right direction, Tali said.
The Financial Intelligence Unit has revoked the licenses of more than 1,000 businesses operating in the area of virtual currencies in 2020. Some 400 service providers whose licenses have been issued in Estonia remain in business. Many of these companies’ links with Estonia are minimal with their main customer bases located in faraway countries instead.
“This is why we will also continue to pay heightened attention to this area in the government committee next year,” Tali said, adding that many important regulatory changes are planned in the area of virtual currency services next year.
A study carried out by the Financial Intelligence Unit this summer shows that virtual currency service providers registered in Estonia have their largest numbers of customers located in the United States, Venezuela, Russia, Vietnam, Indonesia, Brazil, India and Iran. The brokered revenue of virtual currency service providers in the first half of 2019 exceeded €1.2 billion, having more than doubled on year.
At the extraordinary sitting, the committee additionally discussed relocating the Financial Intelligence Unit under the Finance Ministry’s area of governance as an independent institution, and the state of affairs in preparations for the upcoming assessment of the Council of Europe’s Moneyval expert committee on the prevention of money laundering and terrorist financing in 2021.
The activity of the governmental committee on combating money laundering and terrorist finance includes shaping the policy for fighting money laundering and the financing of terrorism as well as coordination in mapping national risks and forming an action plan for mitigating them. The governmental committee brings together officials from several ministries, the Tax and Customs Board, the prosecutor’s office, institutions of the police, the Bank of Estonia and the Financial Supervision Authority.