"This demonstrates the professionalism and decisiveness of Estonia's financial supervision in the ensuring of the state's financial system, Kessler said in his presentation. "The head of the supervision authority is convinced that the real risk of their business being shut down and their liberty deprived is a necessary deterrence for banks and financial institutions and their directors, forcing financial intermediaries to think twice whether taking a risk is really worth it."

According to the head of the FSA, there are four levels in Estonia that are involved in the risks and prevention of money laundering — first the financial intermediaries themselves, then the Financial Intelligence Unit, then investigative bodies, and finally the FSA.

The conducting of risk reviews falls under the scope of the FSA. This means that, from the FSA's point of view, it is problematic if a business related to nonresidents and its risk review are unbalanced, and if reviews are weak and succumb to taken risks. The FSA's task in preventing money laundering is to analyse whether banks' risk reviews are in accordance with a particular bank's business strategy.

"The law does not oblige banks to definitely prevent the crimes or attempted crimes of its clients; we are talking about the categories of diligence and probability," Kessler explained. "The assessment of the compliance of an organisation's risk review with their business strategy is not digital work, as the law only regulates the fundamental rules, but organisations and their business strategies are individual in nature."

Three proposals

At the end of his presentation, the head of the FSA introduced three proposals for further increasing the effectiveness of money laundering prevention.

According to Kessler, the section of Estonian penal law on misdemeanours and misdemeanour procedures needs to be revamped, as in its current state, with its short limitation periods, complicated procedures and small terms of punishment, it is unsuitable for the finance sector.

He also highlighted the need to establish a central national analysis centre that would handle risk analysis for money laundering, the financing of terrorism and the violation of financial sanctions in Estonia.

The FSA chief also found that the EU needs a central institution tasked with the prevention of money laundering which would coordinate the work of member states' corresponding authorities.

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