LICENCES AND PERMITS
When establishing a company, you need to be aware of the fact that there are areas of activity subject to special requirements for which you must apply for an activity licence or submit a notice of economic activity.
The activity licence should be obtained or the notice of economic activity should be submitted before commencing business activity in an area subject to special requirements.
Information about areas of activities that are subject to notification and licences can be found here (link: https://mtr.mkm.ee/infoleht/22).
If you are interested in operating in one of the activities listed, please send us an enquiry and we will assist you with applying for the licence or permit. In addition, if you do not know whether a licence or permit is required or not, we will be glad to advise you.
The operating licences are issued by the Estonian Financial Intelligence Unit (FIU), which is an independent unit of the Estonian Police and Border Guard Board. The company is qualified as a Financial Institution, while having no special reporting requirements to tax authorities. Accounting is conducted similarly to any other company. No additional reporting to the regulator is required, but the FIU may conduct inquiries about the company’s operations.
There are two types of cryptocurrency activity licences:
Providers of a service of exchanging a virtual currency against a fiat currency
Allows exchanging crypto to crypto, fiat to crypto, and vice versa.
Providers of a virtual currency wallet service
Allows providing a virtual currency wallet service, in the framework of which the company generates keys for clients or maintains the client’s encrypted keys. This service offers custodial services of credentials necessary to access virtual currencies.
The applications for the licences mentioned above are done via a company registered in Estonia or through a registered branch office of a foreign company in Estonia.
We assist our clients with establishing the company with the suitable method of incorporation stated above, which is followed by a licence or a licence application to the FIU. We will draft the necessary documentation for the licences, which the client can implement and follow after the licences are granted.
For further information and enquiry, please send your request via our contact form and we will provide you with a tailor-made solution based on your needs.
PROCEDURAL AND INTERNAL RULES
If you are interested in applying for a Financial Intelligence Unit licence, we would be glad to assist you with your procedural and internal policies. We can also provide legal advice on the content of the rules and how you can apply them to your business. In addition, the rules can be modified with the client to produce a document that meets the client’s needs.
The rules of procedure must contain at least the following:
1) a procedure for the application of due diligence measures regarding a customer, including a procedure for the application of simplified due diligence measures and of enhanced due diligence measures;
2) a model for the identification and management of risks relating to a customer and its activities and the determination of the customer’s risk profile;
3) the methodology and instructions where the obliged entity has a suspicion of money laundering and terrorist financing or an unusual transaction or circumstance is involved as well as instructions for performing the reporting obligation;
4) the procedure for data retention and making data available;
5) instructions for effectively identifying whether a person is a politically exposed person or a local politically exposed person subject to international sanctions or a person whose place of residence or seat is in a high-risk third country or country that meets the criteria;
6) the procedure for identification and management of risks relating to new and existing technologies, services, and products, including new or non-traditional sales channels and new or emerging technologies.
The obliged entity arranges adherence to and implementation of the rules of procedure and internal control rules by the employees of the obliged entity.
Please send us an enquiry for further information.
FINANCIAL ACTIVITY LICENCES
A financial institution in the meaning of the Money Laundering Act is deemed a foreign exchange service provider, among others. The licence is provided by the Financial Intelligence Unit.
The Credit Institutions Act also defines financial institutions. Please note that the following activities are not allowed with a licence under the Money Laundering Act. A financial institution is a company other than a credit institution, the principal and permanent activity of which is to acquire holdings or conclude one or more of the transactions as follows:
1) deposit transactions for the receipt of deposits and other repayable funds from the public;
2) borrowing and lending operations, including consumer credit, mortgage credit, factoring, and other transactions for financing business transactions;
3) leasing transactions;
4) payment services for the purposes of the Paying Institutions and E-Money Institutions Act;
5) issue and administration of non-cash means of payment, e.g. electronic payment instruments, electronic money, traveller’s cheques, and bills of exchange;
6) guarantees and commitments and other transactions creating binding obligations to persons in future;
7) transactions for their own account or for the account of clients in traded securities provided in section 2 of the Securities Market Act and in foreign exchange and other money market instruments, including transactions in cheques, exchange instruments, certificates of deposit, and other such instruments;
8) transactions and acts related to the issue and sale of securities;
9) provision of advice to clients on issues concerning economic activities, and transactions and acts related to the merger or division of companies or participation therein;
10) money broking;
11) portfolio management and consultation on investment issues;
12) safekeeping and administration of securities;
13) collection, processing, and transmission of credit information;
14) safe custody services;
15) other transactions and acts which are essentially similar to the financial transactions specified above.
This licence will be granted by the Estonian Financial Supervision Authority and the process is complicated. Therefore, please send us an application and we will analyse your activities to determine how the activities are classified under Estonian law. After the analysis, we will provide a solution based on your company’s activity and assist you with obtaining the licence/licences which is/are required to be able to legally operate.