Estonia Shuts Down Payment Services Company Over AML Infractions
30 May 2019

Estonia’s financial supervisor on Tuesday said it had revoked the operating licence of payment services provider GFC Good Finance Company AS over its failure to comply with the country’s anti-money laundering (AML) laws.

The Tallinn-based company had in recent years “seriously breached” its legal requirements and repeatedly failed to address widespread problems linked to its AML and know-your-customer obligations, according to a statement by Finantsinspektsioon. GFC separately fell short of meeting its minimum capital requirements over a period of more than a year, the authority said.

The compliance failures continued despite repeated warning and multiple monetary penalties, said Finantsinspektsioon, which cited an injunction issued to the firm following an October 2017 onsite inspection that found “serious violations and shortcomings in all areas” examined.

A subsequent onsite inspection in 2018 led the supervisor to issue a second injunction earlier this year, the supervisor said.

In a statement published on its website, GFC acknowledged the loss of its operating license and said it would begin refunding customers in June for payments received after 27 May.

“A regulated payments market cannot tolerate a payment institution that ignores its important obligations under anti-money laundering law to this extent, showing as it does… contempt or incompetence towards the law, or an outright desire to break the law,” said Kilvar Kessler, chairman of Finantsinspektsioon’s management board, in the statement.

GFC majority stakeholder Tiiu Järviste denied the allegations and attributed the decision to an effort by Finantsinspektsioon to improve Estonia’s reputation in light of recent high-profile money laundering scandals, according to a report Tuesday by Postimees.

In February, the financial supervisor ordered the closure of Danske Bank’s Estonian branch following allegations that the unit had processed approximately €200 billion in suspicious payments potentially linked to a Russian money laundering network.

Last month, the authority said unacceptable foreign clients remained in the country’s banking system despite efforts to regulate the sector more stringently. As part of the announcement, the regulator disclosed plans to monitor the financial activity of certain lenders.

Photo: Termer [CC BY-SA 3.0], via Wikimedia Commons

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