The Estonian Financial Intelligence Unit (FIU) announced that during a supervision systematic weaknesses in the activities of Hodltech OÜ d/b/a HODLtech (www.hodltech.eu) have been exposed. Consequently, the company’s crypto license would have been declared invalid after the proceedings. However, Hodltech OÜ renounced its activity license to avoid revocation via FIU. The company did not fulfill the obligation of notification about the suspicion of money laundering and terrorist financing.
The main deficiencies established by the FIU 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 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.
At the beginning of 2022, 381 companies had activity licenses for offering virtual asset services in Estonia. Due to changes in legislation, the companies had to re-submit applications for changing the activity licenses by June 15. As of July 14, 189 companies had valid activity licenses for offering virtual asset services in Estonia.
