Validity check of your cryptocurrency license
After obtaining a cryptocurrency license, you are free to run your business. Let’s make sure your license is authorised.
This post was firstly published on our website.
The consequences of doing business without a proper license are serious, resulting in a company being fined by the regulator. Such recklessness could hopelessly spoil the reputation of the company.
We should also note that crypto-companies are a high-risk area of activity. The proper control of crypto-companies for compliance with relevant legislation requires special attention from the Regulator (Rahapesu andmebüroo).
Reasons for license revocation
The most common problem today is the revocation of licenses from crypto-companies that have changed their owners in the course of their existence.
Another common problem is the Director’s inadequacy and the KYC/AML Officer’s inability to fulfil their duties. Many Estonian companies have lost their licenses due to a lack of contributed share capital or problems with an office that did not meet the Regulator’s requirements.
Crypto business owner may also face another issue regarding a nominal KYC/AML Officer who has no idea about the law based on the license was obtained and about the company’s real activities in which one is employed.
Fraudulent schemes of service providers
Law firms often offer KYC/AML Officer/Nominee Director services to many companies at once, thus jeopardising the licenses and reputation of all their clients. Based on the information we have, over 500 crypto-companies have lost their licenses due to such fraudulent schemes.
It often happens that unscrupulous law firms offer their clients companies with already obtained crypto-licenses; therefore, in search of ready-made and quickly implemented solutions, entrepreneurs agree to such transactions. In such cases, the risks of losing a license, which may arise in the process of a change of ownership, are deliberately concealed by unscrupulous service providers.
Judge for yourself: obtaining a crypto-license by an Estonian citizen lawyer is a much easier and faster process than obtaining a license by a company owned by non-residents of Estonia. After the re-registration of such a company for new owners, the licensing process, in fact, begins from the very beginning, since the Regulator suspends the previous license for the period of the change of management and analysis of information about the new owners and the project.
Before starting the licensing process, you should understand that quick and cheap solutions are excluded. By following such ideas, you take full responsibility for the loss of time and money.
How to check
Before you start working with a service provider, you should check if the law firm is licensed. And thanks to Estonia digitalised society, you have a full right to do this online at:
Crypto-companies and industry partners use this resource to ensure that they/partner companies being considered for cooperation are licensed in Estonia. The information on the website is publicly available. Moreover, on the homepage of the Ministry of Economic Affairs and Communications, you can check:
- The address of the location of the cryptocurrency company.
- An account with a financial institution registered in Estonia.
- KYC/AML Officer’s data (name, surname, email, phone) and the date of issue of the cryptocurrency license.
If you have any questions or suspicions, we recommend that you contact the Regulator directly to resolve them (Rahapesu andmebüroo, firstname.lastname@example.org).
Rahapesu andmebüroo is an Anti-Money Laundering Information Bureau that licenses businesses in Estonia. RAB is an independent structural unit of the Police and Border Guard Board, whose main task is to suppress the financing of money laundering and terrorism in Estonia.
The Bureau analyses and verifies information received from liable organisations and other persons regarding suspicions of money laundering or terrorism, and if necessary, it takes measures to preserve property. If signs of a crime are detected, the force immediately transfers the material to competent institutions. The RAB’s main tasks are described in more detail in the Money Laundering and Terrorist Financing Prevention Act.
It is expected that all persons who suspect that the transaction may be related to the financing of money laundering or terrorism in the course of an economic transaction will report suspicious transactions to RAB.
Since January 2008, it has become possible to report violations over the Internet by filling out an electronic reporting form on the Rahapesu andmebüroo homepage:
Avaleht | Financial Intelligence Unit
Estonia fully transposes the European Union money laundering directives The Parliament of Estonia yesterday approved…
In addition to the main tasks, the Information Bureau on money laundering performs various additional tasks to improve the system’s efficiency for suppressing the financing of money laundering and terrorism in Estonia: for example, various studies were carried out both among market participants and among law enforcement bodies.
Today, one of RAB’s most important tasks is the licensing of participants in the Estonian financial market, in particular, persons providing services to financial institutions, persons offering e-currency exchange services, and persons offering virtual wallet services.
Even though the above-mentioned could sound discouraging, we are here to help. The lawyers of the Company in Estonia OÜ monitor our clients’ compliance with the Regulator’s requirements, preventing fines or license revocation at an early stage.
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