Comparative analysis of Latvian and Estonian AML requirements in regards to the virtual currency exchange service providers – theory and practice

Abstract

Money laundering is considered as one of the most significant types of financial crime. Its magnitude has only increased in the past decade alongside with the development in the technological field. Since the regulatory framework seeks to mitigate threats posed by existing financial instruments, persons willing to initiate these actions still find new ways to proceed with illicit activities. In that regard, this thesis focuses on comprehending regulatory scope and requirements governing virtual currency exchange service providers at the high level (European Union), while further analysis emphasises their implementation in Estonian and Latvian regulatory framework. By comprehending minimum requirements set in respective legal systems, in-depth analysis and further comparison will highlight differences, which arises between regulatory attitudes towards these service providers stemming from both member states of the EU. Since virtual currency as such has been legally defined only by the 5th anti-money laundering directive, the regulatory application remains uncertain, therefore theoretical and practical analysis, thus comparison seeks to comprehend different approaches considered by respective jurisdictions.