The number of registered crypto companies in Estonia has dropped by 80% after it passed a new law to prevent money laundering.
The country’s anti-money laundering regulator, the Financial Intelligence Unit, released a report stating that 389 authorizations have expired and there are only 100 active authorizations for virtual asset service providers.
The controversial law is the Money Laundering and Terrorist Financing Prevention Act. The legislative amendments entered into force on March 15, 2022.
Crypto exodus
Since then, 200 crypto companies in the country have voluntarily waived their authorizations. The FIU has also withdrawn 189 due to non-compliance with the requirements of the amended law.
The director of the financial intelligence unit, Matis Mäeker, said the documents submitted by companies that lost their license show “that the response of the legislator regarding the changes in the law and the supervisory activities have been relevant both before and after the changes . .”
Estonia is one of the most friendly countries for tech startups, including crypto companies. But it also faces reputational risk due to money laundering scandals and crypto scams.
In its efforts to restore its reputation, it has tightened its money laundering laws and required crypto companies to re-apply for licenses. The regulator claimed to have seen “situations that would surprise any regulator” when extending authorizations.
Think of identical business plans of applicants, directors who were unaware of their appointment, fake resumes and other things. In addition, many firms applied through the same legal or corporate service providers.
The regulator plans to continue reviewing authorizations but expects it to return to “normal oversight”.
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