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Estonia Country Summary

81.76 Country Rating /100
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Sanctions

No

FATF AML Deficient List

No

Terrorism
Corruption
US State ML Assessment
Criminal Markets (GI Index)
EU Tax Blacklist
Offshore Finance Center

Background Information


Anti Money Laundering

FATF Status

Estonia is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Evaluation relating to the implementation of anti-money laundering and counter-terrorist financing standards in Estonia was undertaken in 2022. According to that Evaluation, Estonia was deemed Compliant for 7 and Largely Compliant for 18 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 3 of the 11 areas of Effectiveness of its AML/CFT Regime.

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).

Sanctions

There are no international sanctions currently in force against this country.

Bribery & Corruption

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           76

World Governance Indicator – Control of Corruption             91

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

Economy

Estonia is a safe and dynamic country for investment, with a business climate very similar to the United States. As a member of the EU, the Government of Estonia maintains liberal policies 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 on a FDI per capita basis. By 2022, Estonia had attracted USD 33.5 billion (stock) of investment, of which 27 percent was in the financial sector, 19 percent in real estate, and 13 percent in science and technology. United States FDI stock in Estonia is USD 480 million, and Estonian FDI stock in United States reached USD 485 million at the end of 2022, exceeding U.S. investment in Estonia for the first time.

Estonia has been hard hit by Europe’s energy crisis. A sharp increase in electricity prices drove annual inflation to 19.4 percent in 2022, and inflation is forecast at 9.3 percent in 2023. Rapidly increasing costs have increased pressure on Estonian industrial competitiveness. Preliminary data indicates Estonia’s GDP decreased by 1.3 percent in 2022, and GDP is expected to grow 0.4 percent in 2023.

In the area of climate and environmental policies, Estonia is working to decarbonize its economy by reducing its dependency on oil shale in electricity generation, increasing the energy efficiency of buildings, and introducing carbon free transport.

Estonia adopted an investment screening mechanism in January 2023 that will enter into force September 1, 2023. Estonia will review direct and indirect investments by non-EU investors in strategically important and sensitive sectors.

With a flat tax of 20 percent, the Estonian tax system is considered one of the simplest regimes globally. Undistributed profits are not subject to taxation. This may change for companies with an annual turnover of more than 750 million euros as the EU implements the OECD’s global minimum tax agreement.

Estonia offers opportunities for businesses in a number of economic sectors including information and communication technology (ICT), green energy, smart cities, and defense technologies.

Estonia has strong trade ties with Finland, Sweden, and Germany.

Estonia suffers from a shortage of labor, both skilled and unskilled.

Country Links

Financial Intelligence Unit - Estonia (MLIB)

Financial Supervision Authority (Finantsinspektsioon in Estonian)

Bank of Estonia

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