Operate as a Financial Institution License

License for financial services provider in Estonia

Operating licenses are issued by the Anti-Money Laundering Authority and the Financial Services Inspectorate. This difference depends on the service offered, the requirements of special laws and established practices. If you are not sure which institution you should contact, you should contact the Anti-Money Laundering Data Bureau or the Financial Supervision Authority for an answer. The following information may be useful in determining the competent authority.

According to paragraph 1§ 70 (1) of the Money Laundering and Terrorist Financing Prevention Act (RahaPTS), an entrepreneur must be licensed to operate as a financial institution. According to section 6 (2) RahaPTS, the financial institution is:

• currency exchange service provider;
• a payment service provider within the meaning of the Payment Institutions and Electronic Money Institutions Act, except for payment initiation and account information providers;
• establishment of electronic money within the meaning of the Law on Payment Institutions and Electronic Money Institutions;
• the insurer within the meaning of the Insurance Activities Act (hereinafter the insurer) to the extent that he offers life insurance services, with the exception of services related to compulsory contributory pension insurance under the Pensions Act;
• insurance broker within the meaning of the Insurance Activities Act (hereinafter referred to as an insurance broker) to the extent that he or she markets life insurance or offers other investment related services;
• a fund management company, except for the administration of a mandatory pension fund within the meaning of the Funded Pensions Act and an investment fund established as a joint stock company within the meaning of the Investment Funds Act;
• an investment company within the meaning of the Securities Market Act;
• the borrower and loan intermediary in the meaning of the Law on Credit Recipients and Credit Intermediaries (hereinafter KAVS);
• savings and loan cooperatives under the Savings and Credit Cooperatives Act;
• a central contact point designated by an electronic money institution or payment service provider;
• another financial institution within the meaning of the Credit Institutions Act;
• a branch registered in the Estonian Trade Register of a Foreign Service Provider on behalf of a person referred to in Article 6, Part 2, paragraphs 1-11 of RahaPTS.

You must apply for a license to operate the Money Laundering Data Office if you want to carry out activities:

• as a currency exchange service provider (physically, when providing a service, otherwise authorized by the Financial Inspection)
• as a savings and loan association
• as a lessor (for legal entities)
• as a creditor (for legal persons)
• guarantee – and as a provider of warranty services
• as a fund management company (if only registration on the Financial Inspection website is required)
• as another financial institution

It is necessary to apply for a license for activities to the Financial Supervision Authority, if you want to carry out activities:

• as a lender
• as a credit intermediary
• as a management company
• as an investment company
• as an insurer
• as a payment institution or electronic money institution

Important information about obtaining a license of a financial service provider in Estonia

• The managers of small foundations who do not have a license to operate from the Financial Supervision Authority must apply for a license from RAB to operate as a financial institution, as this is a financial service for which the license for the activity was not issued, which is mandatory in accordance with RakhPTS.
• Natural or legal persons whose economic or professional activity consists in granting credit to a limited number of persons in accordance with the law and on the basis of a social objective and at an interest rate below the market or on other terms, more favorable than those that dominate the market, provided that the interest rate is not higher than the average market, must apply for a license to the Data Bureau for money laundering to work as a financial institution (e.g. providing credit only to legal entities, etc.).
• Savings and loan cooperatives must be licensed by the Anti-Money Laundering Data Bureau to operate as a financial institution that meets the following conditions:
• the annual percentage of any loan contract concluded or brokered by a savings and loan cooperative does not exceed the average annual percentage of consumer loans issued by credit institutions to individuals over the last six months, published by the Estonian Bank at the time of the loan;
• the number of members of savings and loan cooperatives is less than 3000 people.
• if there is a deviation from these conditions, the KAVS requires the savings and loan cooperative to apply for a license to operate at the Financial Supervision Authority.

Documents required to obtain a license from a financial services provider in Estonia

A prerequisite for processing an application for a license or an application to change a license for an activity necessary to work as a financial institution is the provision of data and documents specified in the laws (RahaPTS and MSÜS).

The submitted documents and data must confirm to RAB that the entrepreneur meets the requirements of the financial institution. In the case of processing applications for a license, this is an administrative procedure and the language of the administrative procedure is Estonian (HMS § 20 paragraph 1). Therefore, all originals of documents in foreign languages must be accompanied by documents with Estonian translation.

When applying for a license or changing the license of a financial institution must be submitted the following documents and data:

1. Location address, including website address;
2. Name and contact details of the person responsible for the provision of the service for all places of service specified in paragraph 1;
3. If the legal person-entrepreneur is not registered in the Estonian Trade Register, the name, registration or personal code of the owner of the legal entity-entrepreneur, if absent, date of birth, place of residence or place of birth, Name of the actual recipient, personal code if absent, date of birth, place of birth and address of residence;
4. Name, personal code, date of birth, place of birth and address of residence of the member of the management body of the legal entity and the prosecutor of the service provider, if the service provider is not an entrepreneur registered in Estonia. Business register;
5. Procedural rules and rules of internal control drawn up in accordance with articles 14 and 15 of the RahaPTS and, in the case of persons with special duties listed in article 20 of the International Sanctions Act, procedural rules, prepared in accordance with article 23 of the International Sanctions Act. The Law on International Sanctions and the procedure for verifying their implementation;
6. Name, personal code, date of birth, place of birth, citizenship, residence address, position and contact information as specified in ¹ 17 RahaPTS;
7. In accordance with ¹ 20 (3) of the International Sanctions Act, the name of the person responsible for the implementation of the international financial sanction, the entrepreneur’s designated personal identification number, date of birth, place of birth, nationality, place of residence, Position and contact information if not available;
8. If the entrepreneur, a member of its administration, the prosecutor, beneficiary or owner is a national of a foreign State, a service provider established in a foreign State, or if the entrepreneur is a service provider of a foreign State, a certificate of criminal record of his country of origin or an equivalent document issued by a competent judicial or administrative authority, which confirms the absence of a conviction for a crime against the State or for money laundering or other intentionally committed crime, which not issued more than three months and certified and legalized notarized or equivalent to it or certified by a certificate replacing legalization (apostille), unless otherwise provided by a foreign contract;
9. If the entrepreneur, a member of its administration, the prosecutor, the beneficial owner or the owner of the natural person is a citizen of a foreign State, copies of identity documents for all countries of nationality and documents, Certifying the absence of the penalty referred to in paragraph 8;
10. With regard to a member of the management body and the procurator of the company, documents containing the level of education, the full list of positions and positions, and in the case of a member of the management body, the area of responsibility , as well as the documents that the applicant considers important for confirming the reliability of the member of the administration or the prosecutor and the applicant’s proper business reputation. Note! Documents confirming the education (diploma), must be submitted with the application for a license;
11. List of payment accounts opened in the name of the entrepreneur, together with the unique identifier of each payment account and the name of the account holder; Note! All supported payment accounts must be submitted with an application for a license to operate in the environment of the Register of Economic Activities, to which must be added an extract from a credit institution, electronic money institution or payment institution, confirming the existence of a payment account. ;
12. Information on what financial service will be provided (RahaPTS ™ 70, subsection 4). The document describing the service should explain in detail the planned content of the service.

Requirements for the licensor

In order to obtain a license to carry out activities, a financial organization must comply with the conditions of the object of control specified in paragraphs 1-3 and 2 of article 72 of paragraph 1 of RakhAPTS.

The Anti-Money Laundering Data Bureau will only assess the circumstances of the subject of investigation (the requirements of the applicant) when all the data and documents specified in section 70 RahaPTS (data and documents to be submitted) are availablewere properly and correctly represented in accordance with the law.

Claim of invalid fines

In accordance with article 72, paragraph 1, paragraph 1 of RahaPTS, the company, a member of its governing body, The Public Prosecutor, the beneficial owner and the owner shall not have an enforceable sentence for a crime against public authority or money laundering or any other intentionally committed crime. .

If the entrepreneur has a subsidiary company for which it is desirable to use a business license in the name of the entrepreneur, the subsidiary must also comply with this requirement.

Relevant business reputation

According to ¹ 72 (1) para. 11 RakhAPTS, the company, a member of its management body, the prosecutor, the actual beneficiary and the owner must have a proper business reputation. The existence of a good business reputation is assessed by the licensing authority, taking into account the person’s background and circumstances. A proper business reputation is assumed in the absence of circumstances that call it into question.

According to section 72(2) of the Anti-Money Laundering Act, a person does not have a proper business reputation if the Anti-Money Laundering Bureau has established circumstances that call into question its existence or confirm its absence. A person’s business reputation is untrue, including if:

1) Its action or omission resulted in the bankruptcy of the entrepreneur or other person subject to financial supervision or the invalidation of the licence on the initiative of the financial supervisory authority;

2) He has committed a crime of the first degree;

3) In accordance with article 49 of the Criminal Code, the court applied a ban on activities or a ban on doing business under article 491, and also if he is subject to a ban on doing business or to a ban on working in a certain profession or position, or has been punished for violation of such a ban;

4) It is not in a position to organize the business in such a way that the interests of investors and customers are adequately protected;

5) Provided the Money Laundering Data Bureau with false information or failed to provide important information;

6) He was prosecuted for an economic, professional, property or social crime or for financing or supporting a terrorist crime or activities directed at its commission, and the corresponding criminal record is not removed from the record in accordance with article 3. The Criminal Record Act or international sanctions have been imposed on him.

The list in article 72, paragraph 2, of RahaPTS is not a closed list, which means that the correct business reputation may be affected by circumstances that are not mentioned in article 72, paragraph 2, of RahaPTS.

Contact Person Requirements

The contact person designated in accordance with Article 17 of RahaPTS fulfills the requirements laid down in the Law. Only a person with the necessary education, professional abilities, necessary abilities, personal qualities and experience and an impeccable reputation for acting as a contact person may be appointed as a contact person. The designation of a contact person is agreed with the Money Laundering Data Bureau.

If the entrepreneur has a subsidiary company for which it is desirable to use a business license in the name of the entrepreneur, the subsidiary must also comply with this requirement.

Refusal and cancellation of a permit to operate

If the entrepreneur does not comply with the circumstances of the object of mandatory control established in RahaPTS (requirements to the applicant), RAB is obliged under the provisions of ™ 25 paragraphs. operating license.

Grounds for refusal:

1. The entrepreneur shall be prohibited from carrying out any economic activity that is subject to a court decision or that derives from law in the relevant sphere of activity;
2. the entrepreneur or his economic activity does not correspond to one or more circumstances of the object of control of the business license (cf. requirements to the applicant);
3. It appears that, when applying for a permit, the service provider intentionally provided false information that affected the authorization and, if it were not provided, the authorization of the activity should have been refused.

Revocation of business permit

The activity license is void (MSÜS §37 paragraphs 1 and 2 and RahaPTS § 75 of paragraph 1) if:

1. It appears that, when applying for a permit, the service provider intentionally provided false information that affected the authorization and, if it had not been submitted, the authorization for the activity should have been refused;
2. Service provider abandons business (an entrepreneur who fails to comply with the statutory obligation to submit an annual report after six months from the expiry of this obligation shall also be deemed to have completely renounced the business activity). An entrepreneur who fails to provide the required annual confirmation that he has informed the Anti-Money Laundering Data Bureau of all changes to the terms of the business license shall also be deemed to have terminated the economic activity;
3. Validity of the ban on economic activity applied to the entrepreneur in the relevant sphere of activity by a court decision or deriving from the law, with the exception of the ban on economic activity applied on the basis of the MCSI;
4. The company has obtained a license to operate from the Financial Supervision Authority;
5. Repeated failure by the entrepreneur to comply with the instructions of the supervisory authority, the repeated failure to comply with two instructions already constitutes non-compliance and is assessed in proportion to the scope of the company’s activities, the basis and the significance of the instructions issued;
6. the entrepreneur does not comply with the current conditions for issuing a license for activities and the discrepancy is not corrected within the period specified in the order.
7. the entrepreneur did not start working in the requested field within six months of the issuance of the permit (on the basis of § 34 p. 5 of the MLS, the right to leave the economic activity does not exclude the obligation of the entrepreneur to continue the economic activity arising from the law, administrative act or contract, and the entrepreneur is not considered to have terminated the economic activity, If there is an obligation to continue, therefore, even if the company temporarily ceases operations, it does not terminate the obligation to commence activities in the requested area within six months);
8. The entrepreneur did not carry out any economic activity for two years from the date of issuing the activity permit;
9. there is a fundamental violation of the requirements of the business activity included in the object of control of the license for activities, or additional terms of the license (i.e. the company no longer corresponds to the circumstances of the object of control of the license for activities under article 72 of RahaPTS);
10. Activities authorized by an activity license cause significant damage or threat to public order, which did not exist or were not known at the time of the issuance of the license and which outweigh the entrepreneur’s interest in continuing the activity and which cannot be remedied by changing the license for the activity.