FATF AML Deficiency List
Corruption Index (Transparency International & W.G.I.)
Estonia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
Estonia was removed from the 4th Round Mutual Evaluation follow-up process in 2019.
US Department of State Money Laundering assessment (INCSR)
Estonia was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Estonia has a highly developed and transparent banking sector, and its rule of law is recognized as established and mature. Transnational and organized crime groups are attracted to the country for its location between Eastern and Western Europe. Suspicious transaction reports (STRs) show illicit funds from internet crime flowing into Estonia. Online gaming and casinos are both legal in Estonia, although the industry is well-regulated by the Estonian Gambling Act. A review of court decisions related to money laundering show that the most common predicate offenses for money laundering are fraud, computer fraud, and tax-related offenses (both domestic and foreign).
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 75
World Governance Indicator – Control of Corruption 90
Corruption is not a problem for investors in Estonia, which is considered the least corrupt country in Central and Eastern Europe and one of the most competitive new EU member states. The necessary legislation, regulations and penalties to efficiently counteract corruption are in place, and the government has implemented anti-corruption laws effectively. Most of Estonia's public institutions have good anti-corruption and transparency practices. Facilitation payments are prohibited under Estonian law, and the same applies to gifts and hospitality in return for services. Businesses do not perceive these practices to be common in Estonia. For further information - GAN Integrity Business Anti-Corruption Portal
Estonia, a member of the EU since 2004 and the euro zone since 2011, has a modern market-based economy and one of the higher per capita income levels in Central Europe and the Baltic region. Estonia's successive governments have pursued a free market, pro-business economic agenda, and sound fiscal policies that have resulted in balanced budgets and low public debt.
The economy benefits from strong electronics and telecommunications sectors and strong trade ties with Finland, Sweden, and Germany. After two years of robust recovery in 2011 and 2012, the Estonian economy faltered in 2013 with only 1.6% GDP growth, mainly due to continuing recession in much of the EU. GDP growth in 2014 was 2.9% but dropped to 1.2% in 2015 due to lower demand in key Scandinavian export markets. GDP growth is expected to be about 2.2% in 2016.
Estonia is challenged by a shortage of labor, both skilled and unskilled, although the government has amended its immigration law to allow easier hiring of highly qualified foreign workers.
Agriculture - products:
grain, potatoes, vegetables; livestock and dairy products; fish
food, engineering, electronics, wood and wood products, textiles; information technology,
Exports - commodities:
machinery and electrical equipment 34%, food products and beverages 9%, mineral fuels 9%, wood and wood products 10%, metals 7%, furniture 9%, vehicles and parts 6%, chemicals 5% (2015 est.)
Exports - partners:
Sweden 18.8%, Finland 16%, Latvia 10.4%, Russia 6.7%, Lithuania 5.9%, Germany 5.2%, Norway 4.1% (2015)
Imports - commodities:
machinery and electrical equipment 28 %, mineral fuels 11%, food and food products 10%, vehicles 9%, chemical products 8%, metals 8% (2015 est.)
Imports - partners:
Finland 14.5%, Germany 11%, Lithuania 9%, Sweden 8.5%, Latvia 8.3%, Poland 7.4%, Russia 6.1%, Netherlands 5.5%, China 4.8% (2015)
Investment Climate - US State Department
Estonia is a safe and dynamic country in which to invest, with a business climate very similar to the United States. As a member of the EU, the Government of Estonia (GOE) maintains liberal policies in order to attract investments and export-oriented companies. Creating favorable conditions for foreign direct investment (FDI) and openness to foreign trade has been the foundation of Estonia's economic strategy. The overall freedom to conduct business in Estonia is well protected under a transparent regulatory environment.
Estonia is among the leading countries in Eastern and Central Europe regarding FDI per capita. At the end of 2015, Estonia had attracted in total USD 19.3 billion (stock) of investment, of which 27 percent was made into the financial sector, 16 percent into real estate, 15 percent into wholesale and retail trade, and 9 percent into professional, scientific and technical activities.
The Estonian income tax system, with its flat rate of 21 percent, is considered one of the simplest tax regimes in the world. Deferral of corporate taxation payment shifts the time of taxation from the moment of earning the profits to that of their distribution. Undistributed profits are not subject to income taxation, regardless of whether these are reinvested or merely retained.
Estonia offers key opportunities for businesses in a number of economic sectors like information and communication technology (ICT), chemicals, wood processing, and biotechnology. Estonia has strong trade ties with Finland, Sweden and Germany.
Starting December 1, 2014, Estonia offered foreigners the option of e-residency. E-residents are issued a digital identity (smart ID-card) from the Republic of Estonia for a small fee. This does not entail full legal residency, citizenship or right of entry to Estonia, but gives secure access to some of Estonia’s digital services such as business registration and an opportunity to use digital signatures in an electronic environment. Such digital identification and signing is the legal equivalent to face-to-face identification and handwritten signatures in the European Union.
Estonia suffers a shortage of labor, both skilled and unskilled. The GOE has recently amended its immigration law to allow easier hiring of highly qualified foreign workers.
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