AML/CTF legislation country profile

ECBA Questionnaire filled in for Estonia

a)  Legislation

1. Definition of money laundering in the local legal system.

Money laundering is the:

1. concealment of the true nature, origin, location, method of disposal, reallocation, ownership, or other rights related to assets;
2. conversion, transfer, acquisition, possession, or use with the aim of concealing the unlawful origin of assets, or helping a person engaged in illegal activity, so that this person could avoid the legal consequences of his/her acts.

Also assets which have been acquired as a result of illegal activities or as replacement of such assets can be seen as money laundering.


2. Sanctions for money laundering offence.

Money laundering is punishable by a pecuniary punishment or up to 5 years imprisonment.

The same act, if committed:

1. by a group;
2. at least twice;
3. on a large-scale basis,
4. by criminal organisation;

is punishable by
- 2 to 10 years’ imprisonment.

If money laundering is committed by a legal person, then it is punishable by a pecuniary punishment. Aggravated money laundering committed by a legal person is punishable by a pecuniary punishment or compulsory dissolution.

A court may apply confiscation of property which was the direct object of money laundering offence.

The court shall impose extended confiscation of assets or property acquired by the criminal offence.


3. (Legal) professions especially affected by local AML/CTF legislation.

The legislation is applicable in the professional and economic activities of the following operators:

1. credit institutions;
2. financing institutions;
3. gaming companies;
4. persons engaged in real estate transactions of mediation there of;
5. retailers who accept cash exceeding the amount of 200.000 EEK;
6. pawn shops;
7. auditors and accountants;
8. providers of advisory services in the fields of accounting and taxation;
9. Providers of trust fund and corporate services.

The legislation is also applicable to notary publics, lawyers, bailiffs, bankruptcy trustees, and other legal service providers who act in the name and on behalf of a client in a real estate or financing transaction.

These persons shall also be subject to the legislation when they perform assignments related tothe:

1. sale of a real estate, enterprise, or company;
2. management of a client’s money, securities or other property;
3. opening or management of bank and/or securities accounts;
4. acquisition of assets or funds necessary for the establishment, operation, or management of a company;
5. establishment, operation, or management of a trust fund, company, or similar entity.

4. Specific regulations imposed upon attorneys at law.

General requirements apply, with the following exceptions:

1. lawyers can perform identification during the performance of the assignment (not before commencement of work as generally required) when it is necessary in order to avoid interference with the ordinary course of professional activities, and the risk of money laundering and/or terrorist financing is low;
2. lawyers are not required to refuse to provide service to clients who do not provide documents and/or information necessary to perform customer due diligence when the lawyer assesses the legal situation of the client, represents the client in a court or other legal dispute resolution proceedings, or advises the client concerning possible instigation or avoidance of such proceedings;
3. lawyers are not subject to reporting (notification) requirements when they assess the legal situation of the client, represent the client in a court or other legal dispute resolution proceedings, or advise the client concerning possible instigation or avoidance of such proceedings;
4. government supervision concerning the requirements is not exercised by the financial intelligence unit as far as lawyers are concerned – instead it is exercised by the Bar Association.

b) Bar Association

1. Directives – formulated by the Bar Association – guiding the interpretation of the legislation and the force of these directives (binding, guideline,…).

The Bar Association has adopted model rules of procedure governing the measures of prevention of money laundering and terrorist financing by lawyers and law offices.

These model rules serve as guidelines; they do not have a binding effect.

According to the law, each law office is required to adopt its rules of procedure.


2. Causes for discussion at the implementation stage of the European Directive in local legislation especially in relation to a possible conflict between this legislation and your professional code of ethics?

The Bar Association raised its objections to the legislation adopted for the implementation of the third Money Laundering Directive, but they were ignored by the Government as well as Parliament. After the legislation was adopted, there have been extensive discussions concerning this within the Ethics Committee of the Bar Association, and concerns have been communicated to various government agencies, but so far these communications have produced no meaningful results.


3. Any action taken by the local Bar Association against the way in which the European directive was implemented in local legislation?

Legal action has not been taken so far, the Bar Association’s response has been limited to lobbying and similar unofficial procedures.


4.Other bodies that have undertaken any form of action to safeguard the rights of their members in this respect.

No.

c)  Legal practice

1. Particularities that foreign attorneys at law in contact with the local legal system should be aware of / recommendations to be taken into consideration?

Due to the fact that (a) the circumstances where lawyers are subject to the legislation are defined in somewhat unclear manner which could give rise to misunderstandings, and (b) the current law on the prevention of money-laundering is not publicly available in English or other major foreign languages, it is advisable that foreign lawyers seek advice on the applicable rules from the Bar Association or local lawyers who are familiar with the legislation.

It must be noted that legal professions have been subjected to the legislation for a relative short period of time, which means that a substantial number of lawyers in Estonia have a fairly limited knowledge of various aspect of the law and regulations in question.

DISCLAIMER
The ECBA maintains this website to provide and disseminate information on criminal procedure in the EU with regard to national money laundering legislation as it applies to attorneys at law. The content of the website relies on contacts in each jurisdiction and although our aim is to keep this information accurate, the ECBA does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or reliability of the content. This information does not constitute legal advice. If errors are brought to our attention, we will try to correct them.
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Last Updated (Tuesday, 18 January 2011)