This was largely due to the discovery in 2018 that a significant amount of illicit money, estimated at $235 billion, had been laundered through the Estonian branch of Danske Bank, a Danish multinational bank.
In addition to the Danske Bank scandal, Estonia's partnership with the U.S. in cutting off revenues supporting Russia's war machine has also played a role in strengthening AML laws. Estonia has recognized the importance of protecting international financial systems, and strong AML regulations are seen as a crucial part of achieving this goal.
Furthermore, as a member of the European Union, Estonia will soon have to comply with the upcoming Markets in Crypto-Assets (MiCA) laws, which are set to take effect in early 2025. These regulations will require crypto firms to adhere to strict AML and terrorism prevention measures.
The Estonian government has been proactive in implementing measures to prevent money laundering and other financial crimes. In 2019, it introduced new AML laws to regulate crypto-related businesses operating in the country. These laws require crypto firms to register with the Financial Intelligence Unit and comply with AML measures similar to those applied to traditional financial institutions.
The Estonian government has also taken steps to improve its regulatory framework by introducing a new licensing regime for virtual currency service providers, which went into effect in 2020. This licensing regime includes measures such as enhanced AML requirements, capital requirements, and governance standards.
Estonia's efforts to combat money laundering and financial crimes have not gone unnoticed, as the country has been praised by the U.S. government for its strong AML regulations. Estonia's continued commitment to implementing and enforcing these laws will be critical in maintaining the integrity of its financial system and ensuring a level playing field for businesses operating in the country.
