Peculiarities of Regulation of Providing Financial Services in Estonia

Peculiarities of Regulation of Providing Financial Services in Estonia

All Member States of the European Union amend and adapt their legislation to the EU directives and Estonia is no exception.

There are financial services indicated for your consideration in the list below, and in order to carry out services within the territory of Estonia, you must register the activity (with special register) or obtain a license issued by the Financial Services Regulatory Authority of Estonia.

The article deals with commercial partnerships, which to a greater or lesser extent carry out transactions of a certain category, and it is for information purposes only. There are no intentions to interpret the laws of the Republic of Estonia.

You can clarify and familiarize yourself with the list of services indicated below. The service for which financial license is required has explanation in parentheses.

Taking into account services which relate to financial ones, it is possible to specify the following:

• Currency exchange service;
• Payment service (license shall be issued for this type of activity by the financial inspection);
• Alternative payment systems;
• Service of commercial associations, as well as trust funds;
• Service of pawnbroker's office;
• Crediting service, which also include consumer loans, mortgages, factoring and other commercial financing;
• Leasing transaction (transactions);
• Settlements related to transfer of money (permission for this type of activity is issued by the financial inspection);
• Issuance, as well as maintenance of non-cash means of payment, including electronic payment means and excluding bills of exchange and promissory notes, traveler's checks and electronic money (license shall be issued by the financial inspection);
• Service of a currency broker;
• Service of holding and servicing securities;
• Transaction (transactions) and action (actions) associated with sale and issue of securities;
• Transaction (transactions) on guarantees and collateral and other transactions setting onerous obligations;
• Transaction (transactions) associated with foreign currency, securities and other actions in currency markets, including savings certificates, bills of exchange and promissory notes and miscellaneous (license shall be issued by the financial inspection);
• Service of consultations of clients concerning economic activity issues, regarding merge, demerger of the commercial enterprises or transactions concerning acquisition of the commercial companies;
• The service of consultations concerning management of property and investments (license shall be issued by the financial inspection).

The list of those who are required to obtain license or register for each of the abovementioned types of services is indicated below.

This list includes:

• Enterprises carrying out exchange one operating currency for another operating currency
• Enterprises which activities are closely connected with the field of issuing short-term loans (upon the security)
• Companies carrying out issuing and maintaining non-cash means of payment, and these can include all funds replacing cash. Electronic money is not included in this item
• Enterprises carrying out transactions for issuance of consumer credit, mortgages, factoring. Also, it is possible to include there the conclusion of contracts on similar transactions
• Companies engaged in activities for the issuance of securities and conduct actions and transactions related to the sale of securities.
• Commercial enterprises with main and ongoing activities related to the conclusion of leasing agreements
• Enterprises which guarantee the performance of certain obligations of third parties on the basis of an agreement
• Companies with main and ongoing activities, which relates to settlements, transfers of cash and other types of redirection of funds
• Natural / legal persons with main activity of providing the following services to third parties:

- service of establishment of enterprises;
- activity as a manager or a member of the management board of a company;
- the service of providing legal or postal address;
- service regarding trust representation.

• Commercial enterprises, which activities are to provide consultations regarding property management, as well as management of investment issues
• Enterprises, which main activity is the area of holding and servicing securities, and it is also possible to include in this item the service of maintaining the investment portfolio of securities
• Companies engaged in purchasing and selling currency
• Natural persons / legal entities whose/which commercial activities are directly related to transferring funds in one and several currencies. And it is also possible to include currency exchange via the Internet in this item
• Commercial enterprises, which permanent activities are providing advice on investment issues and property management
• Persons whose activities are to sell / purchase / exchange funds with cash equivalent, with the help of which it is possible to discharge existing liabilities. Here we can include those funds that can be exchanged for the existing value through clearing communication systems or systems of transfers.

When registering, you must fill in the appropriate form. It is necessary to specify the following in it:

• Contact information, such as person's name, registration code, address, etc.
• It is necessary to indicate the scope of activity
• Obligatory indication of the address of the place(s) where the service is offered, or it is necessary to indicate the address of the web-page that is used to offer services
• Date of submission of application with signature
• It is also necessary to submit position, name and contact details of the person who signs the application
• Indication of the name of the beneficial owner who offers the service to persons, indication of his personal code, and if there is no code, the date of his birth and the address of his residence shall be indicated
• Indication of the name of the person responsible for offering the service of person resident of Estonia, as well as his contact details
• Specifying the name of managing body of the legal entity, indicating the personal code and, in the absence of such, specifying day, month, year of birth and address of the place of residence, if the person offering the service is not an entrepreneur registered in the commercial region

The following documents are necessary for filing application for obtaining financial license

There is special application for license that is submitted by the company's Board,

And further, this application should be supplemented by the following documents:

• The company's charter
• Business plan for the period of three years
• Memorandum of Association
• Personal information on shareholders
• Document certifying payment of the fee
• internal control rules and regulations on combating legalization of income (money laundering) that have been received through criminal means and financing of terrorism
• Accounting policy of the company's regulations
• List of shareholders of the company
• Information about companies in which the applicant company or members of the management board have shares of more than 20 (twenty) percent
• Data on the auditor (place of residence, name, personal code)
• Annual reports of the company for the last 3 years
• List of the Board’s members (name, surname, personal code, place of residence, workplaces for the last five years, extent of responsibility in the company, as well as range of duties to be executed)
• Documents confirming the amount of own funds with the attachment of the auditor's report, or documents confirming the source of the funds forming the authorized capital of the applicant (in the case of the company at the stage of formation or the existing company that proceeds to increase its issued authorized capital)
• Agreement with representatives or independent agents
• Complemented by the structure of the groups to which the applicant belongs, with the provision of information on the entire chain up to the beneficial owners (natural persons)
• Certified copies of the passport, certificate of lack of the bankruptcy procedure, certificate on absence of criminal record (for shareholders / directors / management personnel / beneficial owners)
• Functions of state authority on supervision for financial activities and licensing.

Consideration of the application takes at least two months and not more than six months. The license is issued without a period of validity.

In order to clarify information concerning the issue under discussion, contact the lawyers of Law & Trust International. Consultations are available by phone, in chat or during private conversation with our specialist at the company's office.