The main deficiencies established by the Financial Intelligence Unit in Hodltech OÜ were, inter alia, insufficient risk assessment, risk appetite; too general procedural rules that were not compatible with the activity of the company; systematic avoidance of due diligence activities when identifying customers or creating and monitoring business relations. The company did not fulfil the obligation of notification about the suspicion of money laundering and terrorist financing.
“The company with its turnover in billions and thousands of clients was one of the largest virtual asset service providers in Estonia but failed to fulfil its responsibilities towards its clients and the state of Estonia,“ said Matis Mäeker, the Head of the Financial Intelligence Unit. “The service provider had only one employee in Estonia, there were three people dealing with risk management, and the internal control system of the company was incompatible to the risks taken. The company said that the reason for leaving the Estonian market were new legal requirements of international norms, and the company notified the Financial Intelligence Unit of its intention to start offering virtual asset services in a neighbouring country that does not yet follow these standards,“ said Mäeker.
The Financial Intelligence Unit continues its supervisory activity in the sector of virtual asset service providers, including in connection with combating money laundering and international financial sanctions.
In the beginning of 2022, 381 companies had activity licences for offering virtual asset services in Estonia. Due to changes in legislation, the companies had to submit applications for changing the activity licences by June 15. Assessing the applications is done by the Financial Intelligence Unit in parallel with its everyday activities. As of July 14, 189 companies had valid activity licences for offering virtual asset services in Estonia.
