LAW ON CREDIT INSTITUTIONS
Chapter 1
GENERAL PROVISIONS
Article 1. Objectives of the Law
This Law defines the concept of a credit institution,
as well as the economic, organisational, and legal basis
for its establishment, activities and liquidation.
Article 2. Application of the Law
(1) This Law will be applied to all the credit
institutions that will be established or are operating in
Estonia, as well as to their subsidiaries and branches.
(2) This Law will also be applied to the subsidiaries
and branches of domestic credit institutions that are
located abroad, if the legislation of the host country
does not provide otherwise as well as to subsidiaries and
branches of foreign credit institutions in Estonia, if
Estonian foreign agreements do not state otherwise.
(3) Other legal acts regulating entrepreneurship apply
to a credit institution provided that they are consistent
with this Law.
Article 3. Concept of Credit Institution
(1) For the purposes of this Law, a credit institution
is a private legal entity that has the right to receive
money deposits or other repayable funds from the general
public and to grant credits on its own account, or to
carry out other transactions as listed in Article 5 of
this Law.
(2) Commercial or business banks can operate only as
joint stock companies (joint stock banks).
(3) Eesti Pank as the central bank is not regarded as
a credit institution pursuant to the present Law.
Article 4. Financial Institution
(1) According to this Law, a financial institution is
a legal entity whose main activity is to carry out one or
more of the transactions set out in Article 5, Clause 1,
Subclause 2-11 but which does not have the right to carry
out the transactions set out in Article 5, Clause 1,
Subclause 1.
(2) A co-operative financial institution is a
financial institution that is entitled to receive money
deposits and other repayable funds from its members only.
(3) A co-operative financial institution can act as a
loan and savings co-operative or co-operative bank.
Article 5. Transactions Allowed for a Credit Institution
(1) A credit institution is allowed to carry out the
following transactions:
1) accepting deposits and other repayable funds
from the general public;
2) loan or credit transactions;
3) financial leasing;
4) payment transfers;
5) issuing and administering non-cash means of
payment;
6) collateral or guarantee transactions;
7) trading for one's own account and as well as
for the account of customers in:
 money market instruments,
foreign exchange,
financial futures and options,
instruments based on foreign exchange rates
or interest rates,
marketable securities;
8) participation in organising securities'
issues and rendering related services;
9) advising customers on economic issues;
10) financial mediation activities;
11) depository transactions;
12) other transactions, similar in essence to
those listed in Subclauses 1-11.
(2) In addition to the transactions listed in Clause 1
of the present Article, credit institutions are permitted
to carry out transactions directly associated with the
maintenance of the bank.
Article 6. Subsidiary of a Credit Institution
(1) A subsidiary of a credit institution is an
institution that has the rights of a legal entity, and at
least half of whose share capital or the number of votes
determined by shares belongs to the said credit
institution (hereinafter parent institution), or over
which the credit institution can exercise control either
directly or indirectly in an alternative way or for an
alternative reason.
(2) Subsidiary undertakings of the subsidiaries of a
credit institution, mentioned in Clause 1 of the present
Article, are treated as subsidiaries of the same parent
institution.
Article 7. Branch of a Credit Institution
(1) A branch of a credit institution is not a legal
entity in its own right. It pursues business on behalf of
the credit institution and on the basis of its licence. A
branch of a foreign credit institution is a legal entity
in its own right and its establishment is regulated by
Article 22 of this Law.
(2) A branch of a credit institution can carry out
either all or part of the transactions permitted to the
credit institution by its licence, and render services to
customers pursuant to the statutes of the credit
institution.
(3) A credit institution is fully responsible for the
activities of its branches. Relations between a credit
institution and its branches are regulated by the statute
of the branch, which is formulated pursuant to the
statutes of the credit institution; it cannot grant the
branch broader authority than permitted under the
statutes of the credit institution.
Article 8. Representative Office of a Credit Institution
(1) A representative office of a credit institution is
a branch of the credit institution, the objective of
which is to represent the credit institution and protect
its interests within a specific territory.
(2) A representative office of a credit institution is
not allowed to carry out transactions listed in Article
5, Clause 1, Subclauses 1-8 and 10-12 of this Law.
Article 9. Responsibility of a Credit Institution
(1) A credit institution is responsible for its
liabilities with all its assets. The owners and employees
of a credit institution are responsible for its
liabilities pursuant to the law, other legal acts, and
the Statutes of the credit institution.
(2) A credit institution is not held responsible for
the liabilities of the State. Neither is the State
responsible for the liabilities of a credit institution
unless stated otherwise in legislation or a bilateral
contract between the State and the credit institution.
Article 10. Usage of the Title "pank" [bank]
(1) The title "pank" or its derivations and its
foreign language counterparts can be only used by a
credit institution with a licence issued by Eesti Pank.
(2) A credit institution that receives money deposits
from the public is obliged to use the title "pank".
(3) A foreign credit institution carrying on its
business in Estonia may use its name registered in the
home country or the Estonian translation thereof. In case
there is a risk that the translation could be mistaken
for the name of another credit institution operating in
Estonia, Eesti Pank is entitled to demand that a
supplement be added to the name to avoid this risk.
(4) The name of a credit institution must not lead to
an interpretation that it is another credit institution
or the central bank.
(5) The subsidiary of a credit institution can only
use the name of the parent credit institution. The name
can be followed by the name of the location of the
subsidiary.
(6) Clause 1 of the present Article shall not apply to
cases evidently having nothing to do with a credit
institution.
(7) Any dispute about the title of a credit
institution shall be settled in the court.
Chapter 2
ESTABLISHMENT AND AUTHORISATION OF A CREDIT INSTITUTION
Article 11. Procedures for Establishment
(1) A credit institution shall be established and it
shall conduct its business pursuant the present Law.
Other legal acts regarding joint stock companies shall
apply provided they do not contradict this Law and other
legal acts concerning credit institutions.
(2) A co-operative credit institution shall be
established and it shall pursue its business subject to
this Law and the Law on co-operative credit institutions.
The provisions of the Law on co-operatives and other
legal acts regulating co-operation shall apply provided
they do not contradict this Law and other legal acts
concerning the business of credit institutions.
(3) In order to establish a credit institution, its
founders shall submit to Eesti Pank an application for an
establishment permit, as well as the documents set out in
Article 3 of this Law.
Article 12. Establishment Permit
(1) Eesti Pank shall decide to grant or refuse the
permit within 3 months of receipt of the founders'
application and the necessary documents. The founders
will be notified of the decision in writing within 10
days after the decision has been made.
(2) Eesti Pank shall refuse to issue an establishment
permit if:
1) the submitted documents are not in accordance
with the existing legal acts;
2) the documents required by this Law are not
submitted within one month of the receipt of the
application;
3) the previous activities of the persons seeking
qualifying holdings as set out in Article 28 of this
Law have demonstrated that they are not capable of
operating a credit institution in an effective and
safe manner, thereby putting at risk the
depositors' interests.
Article 13. Establishment Documents
(1) The founders of a credit institution shall submit
to Eesti Pank the following documents:
1) foundation agreement;
2) statutes;
3) list of planned activities;
4) list of shareholders containing information on
the initial capital to be subscribed, the number of
shares and votes acquired by each shareholder;
5) income declarations for the past five years
from single individuals whose share exceeds 2% of the
credit institution's share capital or number of
votes;
6) the Statutes of legal entities whose share
exceeds 2% of the credit institution's share
capital or number of votes, as well as financial
reports for the past five years, the auditor's
statement as well as the lists of owners together
with their share in the capital of the corresponding
legal entity.
(2) Eesti Pank may demand that additional information
and documents be submitted in order to get more specified
information and check the documents, set out in Clause 1
of the present Article.
Article 14. Granting a Licence
(1) A credit institution has to obtain a licence
issued by Eesti Pank before commencing its activities.
(2) A licence will be issued to a credit institution
that has received an establishment permit from Eesti Pank
subject to the following prior conditions:
1) the credit institution's share capital has
been fully paid up and deposited with a credit
institution operating in Estonia or with Eesti Pank;
2) the breakdown of capital between shareholders
is consistent with the provisions of this Law and the
Statutes of the credit institution;
3) the credit institution has premises, vaults,
technical equipment and security systems that are
consistent with all the requirements necessary for
pursuing the business of a credit institution;
4) the prospective management of the credit
institution meets the requirements set out in Article
26 of this Law.
(3) Eesti Pank shall establish the procedures for
issuing a licence, decide upon the list of documents
pursuant to Subclause 2 of the present Article, as well
as the compulsory data that must be provided therein.
(4) Eesti Pank shall decide upon whether to grant or
refuse a licence within 2 months after receiving of all
necessary documents pursuant to Subclause 2 of the
present Article. The applicants shall be notified in
writing within 10 days after the decision has been made.
(5) Eesti Pank may decide to issue a licence for
carrying out only some of the transactions listed in
Article 5 of this Law or issue the operating licence
subject to the fulfilment of certain conditions or
meeting of a deadline:
1) if so requested by the credit institution
itself;
2) if the credit institution lacks the necessary
resources to carry out all the transactions it has
applied for or lacks a licence foreseen by other
legal acts.
(6) A credit institution may commence its business
after having obtained its licence and after it has been
registered as required by the law.
(7) The licence may not be traded and its acquisition
and usage by a third party is forbidden.
Article 15. Content and Limits of the Licence
(1) The licence sets out the transactions the credit
institution is allowed to carry out.
(2) The licence must contain information about the
duration of its validity, date of issue, issuer's
requisites, the number and date of the decree the licence
is based on.
(3) The credit institution and its branches must have
a copy of the licence placed so that it can be readily
seen. The public is entitled to examine the licence
issued to a credit institution.
Article 16. Refusal to Issue a Licence
Eesti Pank may refuse to issue a licence if the
conditions, established in Article 14, Clause 2 of this
Law have not been met.
Article 17. Changing or Suspending a Licence
Eesti Pank is entitled to change or suspend either
partially or completely the licence issued to a credit
institution
1) if so requested by the owner of the licence;
2) on its own initiative if changing or suspending
the licence results from this Law.
Article 18. Expiration of the Licence
The licence expires:
1) on its expiration date if it is not renewed;
2) in case the credit institution is reorganised
according to Chapter 4 of this Law;
3) on the day the resolution of liquidation of the
credit institution comes into effect.
Article 19. Withdrawal of the Licence
Eesti Pank may withdraw the licence
1) if the credit institution does not commence
business within 12 months after the first issuance of
the licence;
2) if information submitted by the credit
institution when applying for an establishment permit
or licence proves invalid;
3) if prudential and other ratios established by
this Law to ensure the solvency of a credit
institution and protection of creditors' interests
have been violated, and the ratios required by the
norms have not been restored by the deadline set by
Eesti Pank;
4) if a credit institution gets involved in
activities not consistent with those set out in its
licence and its structure;
5) if wrong or misleading data, information,
advertisements or reports are submitted or published
deliberately;
6) if regulations pursuant to the law prohibiting
money laundering are violated;
7) if a credit institution has repeatedly violated
the law or legal acts pursuant to this Law.
Article 20. Results of Suspension, Expiration and
Withdrawal of a Licence
(1) A credit institution may not carry out
transactions permitted by its licence after the licence
has been suspended or withdrawn, or has expired.
(2) The expiration or withdrawal of a licence will
bring about the winding up of the credit institution as
set out in Chapter 10 of this Law.
Article 21. Establishing a Subsidiary or a Branch of a
Credit Institution Abroad
(1) If a credit institution wishes to establish a
subsidiary or a branch abroad, it must submit an
application to Eesti Pank with the following information:
1) the name of the country where the credit
institution wants to establish its subsidiary or
branch;
2) a list of the transactions of the subsidiary or
branch, and the relationship of the subsidiary or
branch with the parent credit institution;
3) the address of the subsidiary or branch;
4) names of the candidates for the executive staff
of the subsidiary or branch.
(2) Eesti Pank will forward the information stated in
Clause 1 of this Article together with the data on
capital and liquidity of the credit institution wishing
to establish a subsidiary or branch, information on
transactions licensed by Eesti Pank and deposit insurance
scheme to the banking supervision authority of the
relevant host country no later than one month after
receipt of such data and will also inform the credit
institution of this action.
(3) If Eesti Pank finds that the financial status of
the credit institution is not reliable enough for
establishing the intended foreign subsidiary or branch,
it may refuse to submit the information set out in Clause
2 of the present Article and refuse to grant permission
for the establishment of the subsidiary or branch. Eesti
Pank will inform the credit institution in writing about
the refusal and the reasons of such action within one
month of receipt of the information listed in Clause 1 of
this Article.
(4) A credit institution owning a subsidiary or branch
in a foreign country is obliged to inform Eesti Pank of
its intention to change any of the particulars listed in
Clause 1 of this Article at least two months before the
changes take place.
Article 22. Establishment of a Subsidiary or Branch of a
Foreign Credit Institution in Estonia
(1) In order to establish a subsidiary or branch of a
foreign credit institution in Estonia, it is necessary
for the credit institution to submit an application to
Eesti Pank via the banking supervision authority in its
home country. The following information must be enclosed:
1) a description of the activities and a list of
the transactions of the subsidiary or branch and the
relations with the parent credit institution of the
subsidiary or branch;
2) the address of the subsidiary or branch;
3) the names of the candidates for the executive
staff of the subsidiary or branch.
In addition to the above mentioned information, a
confirmation from the banking supervision authority of
the applicant's home country on the capital size and
liquidity of the credit institution, together with the
confirmation on the deposit insurance scheme, must be
presented. Confirmation that the intended activities are
compatible with the licence of the credit institution is
also required.
(2) Eesti Pank will review the application and will
make its decision known to the applicant as required
under Clause 1, Article 13 of this Law.
(3) A subsidiary or branch of a foreign credit
institution must obtain a licence from Eesti Pank before
commencing its activities. This requirement does not
apply to the representative offices of foreign credit
institutions.
(4) In making its decision, Eesti Pank will take into
consideration the operating conditions of Estonian credit
institutions in the applicants' home country.
(5) The procedures for establishing subsidiaries and
branches of foreign credit institutions and of issuing
licences to them, is to be determined by Eesti Pank.
Chapter 3
THE STATUTES, MANAGING AND SHARE CAPITAL OF A CREDIT INSTITUTION
Article 23. Requirements to the Statutes of a Credit
Institution
(1) Concrete limits relating to the competence and
responsibilities of the executive staff and the employees
or the procedures for determining these limits as well as
the competence of bodies of executive and non-executive
management and control and internal control must be set
out in the statutes of a credit institution.
(2) The statutes of a credit institution cannot set
any restrictions on the free transferability of the
shares of a credit institution to any third parties.
Article 24. Amendments to the Statutes of a Credit
Institution
(1) A credit institution must co-ordinate all the
amendments of its statutes with Eesti Pank.
(2) A credit institution must submit an application
for the approval of an amendment to Eesti Pank no later
than 10 days after the resolution has been taken by the
general meeting.
(3) Eesti Pank will inform in writing of its decision
to approve the amendments of the statutes of a credit
institution or of its refusal to do so no later than one
month after the receipt of the application.
(4) Eesti Pank may refuse to approve the amendments if
they are not in accordance with existing legal acts.
(5) The amendments are recorded in the business
register prescribed by law after they have been approved
by Eesti Pank.
Article 25. General Provisions of Managing a Credit
Institution
(1) The bodies of executive and non-executive
management and control of a credit institution are the
shareholders' general meeting and the Executive Board.
The shareholders have the right to establish a Council
the authority of which is determined by the statutes of
the credit institution.
(2) The Executive Board of a credit institution
consists of a chairman and at least 2 members elected by
the Council or at the shareholders' general meeting.
Neither an internal control employee nor an auditor can
be a member of the Executive Board or the Council of a
credit institution.
(3) The Chief Executive Officer of a credit
institution, according to its Statutes, is either the
Chairman of the Executive Board or a person employed for
that purpose. The Chief Executive Officer's
responsibilities consist of running, organising and
inspecting the daily affairs of the credit institution.
(4) Minutes must be taken at the meetings of the
bodies of executive and non-executive management and
control of a credit institution and the records must
contain voting results. They must be signed by all
persons participating in decision-making or by such
persons authorised by them.
Article 26. Requirements for Executives and Employees of
Credit Institutions
(1) Pursuant to this Law, the executives of a credit
institution must be individuals, who by law, statutes or
some other document, have been elected or employed to be
in charge of a credit institution, to represent it and
supervise its activities. The Chief Accountant is also
one of the executives of the credit institution.
(2) Individuals who are elected or employed as
executives of a credit institution must have an
appropriate academic degree, knowledge and professional
aptitude as well as a sound business reputation.
(3) The Chief Executive Officer of a credit
institution must have a university degree in economics
or law or at least five years experience as a
financial executive.
(4) Individuals whose prior activities or inactivity
have resulted in a bankruptcy or compulsory liquidation
of a credit institution cannot be elected or nominated to
the post of an executive of a credit institution.
(5) Executives of a credit institution must be
citizens of the Republic of Estonia or possess a
permanent residence permit in Estonia. This requirement
is not applicable if foreign contracts state otherwise.
(6) Executives of a credit institution, as well as the
employees of internal control cannot be members of the
executive, representative or internal control bodies of
other credit institutions.
(7) Executives of a credit institution must not have
job contracts with other businesses.
(8) Any executive or employee of a credit institution
who participates in taking decisions on the granting of
credits must report to a special body in charge of giving
loans, if a loan application is received from a legal
entity in the management of which a close relative of his
or her is employed. The above mentioned executives or
employees may not participate in deciding on the relevant
transaction.
(9) Information on the election, employment,
resignation or dismissal of the executives of a credit
institution must be reported to Eesti Pank within 10 days
of the enactment of the corresponding resolutions,
contracts or decrees.
Article 27. Share Capital of a Credit Institution
(1) When a credit institution is established, its paid
up share capital must be the equivalent to no less than
ECU 5 million calculated according to the Eesti Pank
exchange rate.
(2) The formation or increase of share capital can
take place only through cash payments. The share capital
may also be increased through a capitalisation issue.
(3) The voting shares cannot be divided into classes
with different voting rights or into different
categories.
(4) A credit institution is prohibited from purchasing
its own shares.
Article 28. Qualifying Holding
A qualifying holding within the meaning of this Law is
a holding of capital representing 10% or more of the
undertaking's share capital or of the voting rights, or
which makes it possible to exercise significant influence
over the management of the undertaking, either on the
basis of a contract or in some other way.
Article 29. Increasing and Disposing of Qualifying
Holding
(1) A credit institution or individual who is willing
to acquire, directly or indirectly, a qualifying holding
of a credit institution, or to increase such a holding to
exceed 20%, 30% or 50% of the credit institution's
share capital or number of votes, must apply for
authorisation from Eesti Pank. The application shall be
submitted in writing and must contain information on the
size of the intended holding.
(2) The obligation to obtain authorisation set out in
Clause 1 of the present Article also applies to cases
when:
1) the acquisition or increase of a qualifying
holding results from the activities of third parties;
2) the credit institution might, as a result of a
transaction, become a subsidiary of some other
person.
(3) Eesti Pank will refuse authorisation to acquire or
increase a qualifying holding in a credit institution:
1) to a person who lacks an immaculate business
reputation;
2) if it may restrict free competition.
(4) Eesti Pank will make a notification of its
decision concerning the authorisation mentioned in Clause
1 of the present Article no later than one month after
the receipt of the application.
(5) Should Eesti Pank refuse the authorisation
mentioned in Clause 1 of the present Article, the
transaction of acquiring or increasing the qualifying
holding shall not be allowed.
(6) A credit institution and a person wishing to
dispose of a qualifying holding in a credit institution
is required to inform Eesti Pank beforehand.
Chapter 4
REORGANISATION OF A CREDIT INSTITUTION
Article 30. Ways of Reorganising a Credit Institution
(1) The reorganisation of a credit institution is the
re-arrangement of its activities through merger,
acquisition, splitting up or separating with consequent
transfer of management, rights, obligations as well as
part or all of the assets to one or several legal
successors.
(2) When credit institutions merge, all their rights
and obligations will be transferred to the new credit
institution that results from the merger (hereinafter new
credit institution) and that has a new name and Statutes.
The merged credit institutions cease to exist and will be
deleted from the business register.
(3) When credit institutions cease to exist due to
acquisition, all the rights and obligations of the
acquired institution (hereinafter acquired institution)
will be transferred to the other credit institution
(hereinafter acquiring credit institution). The acquired
credit institution will cease to exist and will be
deleted from the business register.
(4) When a credit institution splits up, all the
rights and obligations of the reorganised credit
institution will be transferred to the new credit
institutions that emerge according to the act of
splitting up. The reorganised credit institution
(hereinafter split-up credit institution) will cease to
exist and will be deleted from the business register.
(5) When one or several new credit institutions
separate from a credit institution, the rights and
obligations of the reorganised credit institution will be
transferred to all in corresponding proportions according
to the separation act. The reorganised credit institution
(hereinafter separated credit institution) will continue
its activities on a smaller scale, based on its former
Statutes and licence and under its previous name.
(6) Credit institutions that emerge as a result of
reorganisation must apply to Eesti Pank for a licence.
Article 31. Resolution on Reorganisation
(1) The reorganisation of a credit institution will
take place, as provided under its Statutes, on the
strength of the resolution of its bodies of executive and
non-executive management and control. The resolution on
reorganisation must pass with at least a 2/3 majority of
votes.
(2) Eesti Pank has the right to obligate a credit
institution having solvency problems to reorganise in
order to protect the interests of its creditors.
(3) The resolution mentioned in Clause 1 of the
present Article must be supplemented by the following
documents:
1) a decision on the confirmation of the
reorganisation, i.e., acquisition or merger
contracts, or splitting-up or separation acts;
2) a decision on the confirmarion of the statutes
of the new credit institution;
3) a decision on the confirmation of the
amendments made in the structure of the acquiring or
separated credit institution.
Article 32. Merger of Credit Institutions
(1) A written merger contract serves as a foundation
of the merger and constitutes the establishment contract
of the new credit institution.
(2) The total amount of own funds of the new credit
institution that is formed as a result of the merger must
not be smaller than the sum of the own funds of the
merged credit institutions at the time of their merger as
provided under Article 37 of this Law. In case the sum of
own funds is less than required, Eesti Pank will set a
deadline by which the required amount of own funds must
be restored.
(3) The licences of merged credit institutions are
cancelled from the day the new credit institution is
registered pursuant to the law and these credit
institutions will be deleted from the business register.
Their rights and obligations will be transferred to the
new credit institution as their legal successor.
(4) The merger contract comes into force and the new
credit institution commences its activities and gains its
legal capacity after the day of its registration as
established by law.
(5) The merger and the commencement of activities of
the new credit institution must be made public by the new
credit institution's executive board in at least one
national paper the day after the merger contract comes
into force.
Article 33. Acquisition of Credit Institutions
(1) With the permission of Eesti Pank a credit
institution can acquire one or several credit
institutions.
(2) The requirement, established in Clause 2, Article
32 of this Law applies to the own funds of the acquiring
credit institution.
(3) The written acquisition contract serves as the
foundation of the acquisition and in addition to the
agreed terms of the parties, the contract must stipulate
that all the rights and obligations of the acquired
credit institution are transferred to the acquiring
credit institution as the legal successor on the day the
contract comes into force.
(4) The endorsed acquisition contract must be
submitted to Eesti Pank, along with the application for
authorisation.
(5) The acquisition contract will come into force
after authorisation from Eesti Pank is obtained and which
the Executive Board of the acquiring credit institution
must publish an announcement on it in at least one
national paper on the next working day.
(6) The acquired credit institution is considered to
be reorganised from the day the acquisition contract
comes into force, its licence will be cancelled and the
credit institution will be deleted from the business
register.
Article 34. Property Rights of the Owners of Merged,
Acquired or Acquiring Credit Institutions
The shares of merged, acquired or acquiring credit
institutions shall be replaced, as provided for under the
merger or acquisition contracts.
Article 35. Splitting up or Separation of a Credit
Institution
The splitting up or separation of a credit institution
may take place on the following condition only:
1) the share capital of each new emerging credit
institution is not less than the equivalent of ECU 5
million calculated according to the Eesti Pank
exchange rate;
2) the own funds of the separated credit
institution is not less than the equivalent of ECU 5
million calculated according to the Eesti Pank
exchange rate.
Chapter 5
REQUIREMENTS FOR GUARANTEEING THE CREDIBILITY OF A CREDIT
INSTITUTION AND THE PROTECTION OF THE INTERESTS OF CUSTOMERS
Article 36. Prudential ratios
(1) In order to guarantee the credibility of a credit
institution and to protect the interests of customers, a
credit institution must on a continuous basis observe the
prudential ratios determining:
1) the minimum size of own funds;
2) capital adequacy;
3) liquidity;
4) reserve requirement;
5) risk concentration;
6) investment restrictions;
7) other reserves.
(2) The prudential ratios, instructions on how to
calculate them and procedures for reporting, shall be
established by Eesti Pank.
(3) Eesti Pank shall supervise the observance of the
prudential ratios by the credit institution and shall set
a deadline for achieving the required standards, if
necessary.
(4) It is the obligation of the executives and the
auditor of a credit institution to immediately inform
Eesti Pank in case prudential ratios are not met.
Article 37. Capital Adequacy
(1) In order to guarantee the covering of possible
losses, it is the obligation of a credit institution to
meet the ratio of its own funds to the risk weighted
assets, i.e., the capital adequacy ratio. The minimum
capital adequacy ratio of a credit institution is 8%.
(2) Own funds of a credit institution include:
1) paid up share capital
2) reserves
3) profit (loss) confirmed by an auditor
4) subordinated loan capital.
(3) Deductions from the own funds of a credit
institution can be made according to procedures
established by Eesti Pank.
(4) The amount of own funds of a credit institution
must be not less than ECU 5 million calculated according
to the Eesti Pank exchange rate.
Article 38. Liquidity
(1) A credit institution must allocate its assets in
such a way that the creditors' legitimate claims can be
satisfied at any time, i.e. the credit i institution's
liquidity is guaranteed. For that purpose a credit
institution must maintain the ratio of liquid assets to
current liabilities.
(2) A credit institution shall be obliged to deposit a
certain part of its funds as a reserve requirement with
Eesti Pank, if the latter has not declared otherwise.
(3) The amount and the procedures for using the
reserve requirement shall be determined by Eesti Pank.
Article 39. Investment restrictions
(1) For the purpose and within the meaning of this
Law, investments are the acquisition of fixed assets or
the acquisition of a financial interest in another
entity.
(2) A credit institution is not allowed to invest in
an entity, the Statutes of which provide for the
owners' unlimited liability.
(3) A credit institution's qualifying holding in an
another undertaking cannot exceed 15% of the credit
institution's own funds.
(4) The total of qualifying holdings of a credit
institution in other undertakings cannot exceed 60% of
the credit institution's own funds.
(5) The restrictions in Clauses 3 and 4 of the present
Article will not be applied if the holding is in another
credit or financial institution.
(6) The total of a credit institution's investments
based on their balance sheet value, cannot exceed the own
funds of the credit institution.
(7) Clauses 3, 4 and 6 of the present Article do not
apply to:
1) shares that the credit institution has acquired
on behalf of a third party provided it does not hold
them for more than two years;
2) fixed assets, current assets and shares that
the credit institution has acquired to prevent or
avoid losses, if it does not hold them for more than
two years;
3) fixed assets and current assets that a credit
institution needs to carry out transactions permitted
under its licence.
Article 40. Requirements on Credits
(1) For the purpose of the present Article and Article
42 of this Law, loans shall mean balance sheet assets and
off-balance sheet liabilities of a credit institution
that have resulted from transactions listed in Subclauses
2, 3, 6, 7, Clause 1, Article 5 of this Law.
(2) It is the obligation of a credit institution to
follow the main principles of crediting and good banking
practice, including making inquiries about the
borrower's solvency and the existence of collateral.
(3) Neither directly nor indirectly is a credit
institution allowed to give a loan for the purchase of
its own shares or to accept its own shares as a
collateral for a loan.
(4) Credit institutions are allowed to give loans only
when collateral mentioned in Clause 5 and 6 of the
present Article are available, the existence of which has
been confirmed both from documents and physically by the
creditor or his guarantor. The results of such a
confirmation must be documented.
(5) Loans with current assets as a collateral can be
provided:
1) the loans are collateralised by physically
existent gold or other precious metals, bills of
exchange and other notes recording a promise to pay
specific sums by a given date, state and municipal
bonds, shares, bonds and pledges, goods, bills of
lading and certificates of deposit or other non-fixed
assets accepted by the credit committee of the credit
institution as actual collateral;
2) the market value of the collateral exceeds the
amount of the loan.
(6) Loans with fixed assets collateral can be granted
provided all burdens, encumbrances and liabilities levied
on the collateral property together with the
collateralised loan do not exceed two thirds of the
market value of that property as assessed by the credit
institution.
(7) A credit institution cannot provide interest-free
loans, except in cases foreseen by legislation.
(8) A credit institution cannot provide loans with an
interest rate less than the interest rate paid on loans
and deposits taken in by the credit institution.
Exceptions can be made only when providing inexpensive
favourable loans foreseen by legislation.
(9) The Chairman of the Executive Board, members of
the Executive Board, the Chief Executive
Officer, the Chairman of the Credit Committee, the
Chairman of the Auditing Committee and the members of
that Committee as well as the employees of the credit
institution cannot get a loan from the same credit
institution in any form. Neither are loans allowed to be
granted to any operating legal entity the owner
(including shareholders owning more than 10% of shares)
of which is a shareholder having a qualifying holding in
the credit institution, or the Chairman of the Executive
Board, or a member of that Board or the Chief Executive
Officer, nor to legal entities the majority of whose
Executive Board or Council is formed by the members of
the Executive Board of the credit institution or the
employees of the credit institution. This prohibition is
not applied to loans that are provided by an employees'
mutual assistance or provident fund specially created for
that purpose.
(10) Shareholders of the credit institution possessing
more than 10% of the share capital may be granted a loan
from the same credit institution only on the following
restrictive conditions:
1) the total of the loan does not exceed 50% of
the sum directly or indirectly invested by the
shareholder in the share capital;
2) the loan applicant is not employed by the
credit institution, nor does he act in any capacity
which would preclude him from obtaining a loan from
the same credit institution pursuant to Clause 9 of
the present Article;
3) the loan is provided with the maturity of up to
one year and the loan agreement stipulates that the
loan may be extended only once and for a maximum
period of six months;
4) a member of the credit committee does not
participate in the decision making upon a loan in
case he or his next of kin is the applicant (he has
neither the right to speak nor to vote);
5) the shareholders of a credit institution are
regarded as connected parties within the meaning of
Clause 3, Article 42 of this Law.
Article 41. Credit Committee
(1)The granting and extending of loans
exceeding the limits stipulated by the credit institution
in its Statutes is carried out by a decision of a special
Credit Committee in each case. Prior to making its
decision the Credit Committee must examine all documents
submitted by the applicant of the loan as well as other
information and must make a statement that is recorded in
the minutes of the meeting, regarding the applicant's
solvency and credibility and the existence and
sufficiency of the collateral offered by the applicant.
(2) The Credit Committee is established as foreseen by
the Statutes of the Credit Institution. It must have at
least five members, including the Chief Executive Officer
of the bank, who cannot be the Chairman of the Credit
Committee or act as such in the absence of the Chairman.
(3) The meetings of the Credit Committee shall be held
as closed sessions. The granting of loans is to be
decided by an open roll-call vote and by a majority of
votes cast. In case of equal distribution of votes, the
Chairman's vote is decisive. Minutes are taken at the
meetings. The minutes must be signed by all the committee
members present.
(4) The Credit Committee is not required to state
reasons for refusing to grant a loan.
Article 42. Requirements on Risk Concentration
(1) An exposure is considered to be a large exposure
if its value exceeds 10% of a credit institution's own
funds. Such exposures can only be accumulated with the
approval of an authorised statutory body.
(2) A credit institution is not permitted to
accumulate an exposure that exceeds 25% of the credit
institution's own funds to a single individual or group
of connected parties.
(3) Connected parties are:
1) two or more persons one of whom holds power of
control over the activities of the other or others;
2) two or more persons which lack the connection
mentioned in Clause 1 of the present clause, but who
are interconnected to such an extent that if one of
them experiences financial difficulties, the other or
all of them will also encounter or are likely to
encounter financial difficulties.
The existence of common ownership, common owners,
common directors and commercial interdependence is taken
into account when determining whether parties are
connected.
(4) A credit institution may not accumulate exposure
to the credit institution's subsidiary, parent
undertaking and other subsidiaries of the parent
undertaking which in aggregate exceeds 20% of the credit
institution's own funds.
(5) A credit institution may not accumulate large
exposures which in the aggregate exceed 800% of credit
institution's own funds.
(6) It is the obligation of a credit institution to
inform Eesti Pank of all borrowers whose obligations to
the credit institution exceed 3% of the credit
institution's own funds and of the collateral provided
by these borrowers. If the borrowers are legal entities,
information on those individuals (shareholders) which
have qualifying holdings in the undertaking that are the
beneficiaries of such lending, must also be reported.
(7) If it appears from the information submitted to
Eesti Pank that the same borrower has been granted loans
mentioned in Clause 1 of the present Article by several
credit institutions, Eesti Pank shall so inform all the
credit institutions that have granted loans to that
customer. This information will be limited to the total
indebtedness of that borrower and data on the credit
institutions that participated in such loans.
(8) Exceptions to the limits established in Clauses 2,
4, and 5 of the present Article and the procedures for
making such exceptions will be determined by Eesti Pank.
Article 43. Overdue Loans
(1) For the purpose of this Law, an overdue loan is
defined as a loan or part thereof that is not repaid by
its maturity date, as well as a loan in respect of which
interests are not paid as required by the loan agreement,
or the repayment of which is regarded improbable for
other reasons.
(2) It is the responsibility of a credit institution
to monitor all overdue loans, taking into account the
probability of their redemption. If the repayment of a
loan is regarded improbable, it must be recorded as an
expenditure. The criteria for evaluating overdue loans
and the procedures for writing them off are to be
determined by Eesti Pank.
(3) It is the obligation of a credit institution to
inform Eesti Pank regarding the overdue loans.
Article 44. Reserves
It is the obligation of a credit institution to
allocate reserves in order to provide for possible
losses. The size of the reserves as well as the
procedures for establishing, maintaining and using the
reserves shall be determined by Eesti Pank.
Article 45. Procedure for Settling Accounts
(1) Credit institutions located in Estonia must settle
accounts according to the regulations established by
Eesti Pank.
(2) Credit institutions located in Estonia must open a
correspondent account with Eesti Pank.
Article 46. Bank Secrecy
(1) It is the obligation of the executives and
employees of a credit institution upon being employed
as well as after they have resigned, to keep secret
all information regarding the customers' accounts, bank
transactions, their financial status and the credit
institution's security systems that they acquired
during the period they worked for the credit institution.
The above obligation does not apply to disclosure of
information permitted by this Law.
(2) A credit institution is obliged to keep the bank
secrecy set out in the present Article for an unlimited
period.
(3) The information set out in Clause 1 of the present
Article, with the exception of security systems' codes,
may be revealed to Banking Supervision employees or other
persons authorised by Eesti Pank.
(4) The information set out in Clause 1 of the present
Article, apart from the information on the credit
institution's security systems, may be revealed :
1) to a court of law on the basis of a court
decree or verdict;
2) to a criminal investigation establishment on
the basis of a written resolution;
3) to a tax administrator in connection with
enterprises, institutions and other organisations
that are being reviewed and their partners in
transactions pursuant to Articles 16 and 17 of the
Law on Taxation (RT I 1994; 1,5; 24, 394 and 54, 904)
on the basis of an order from the tax administrator;
4) to persons to whom, according to legislation,
the bank secrecy obligation applies;
5) to the State Audit Office in connection with
state institutions, state-owned enterprises and other
state organisations on the basis of a written request
by the State Auditor or an official so authorised by
him in cases of reviewing the usage and maintenance
of state property within the competence of the State
Audit Office;
6) to persons so legally authorised by the
customer regarding the customer's account;
7) after the testator's death, to persons whose
names the holder of the account has included in the
testamentary order made to the bank, as well as to
notary's offices and foreign consular
representations if they have been mentioned in
testamentary documents, concerning the above account
and relating information.
(5) In order to offset the expenses incurred in
connection with the disclosure of information to a tax
administrator pursuant to Subclause 3, Clause 4 of the
present Article, Eesti Pank has the right to establish a
fee or the maximum of the fee to be paid to credit
institutions.
(6) A credit institution may establish, in addition to
the information mentioned in Clause 1 of the present
Article, a list of supplementary information that it does
not allow to be made public. This list cannot contain
information that a credit institution is required to
provide by law.
(7) The following information is not considered a bank
secret: lists of the founders and owners of the credit
institution, the shares of different individuals in the
bank's share capital, the size of own funds and reserve
capital, compliance with deadlines for submitting
reports, quality of reports, information about the
general economic status and numerical values of
prudential ratios, as well as information on breach of
law committed by a credit institution or its employees.
(8) It is the obligation of a credit institution to
sign with individuals, mentioned in Clause 1 of the
present Article at whose disposal there is information
containing bank secrets, an employment contract that
establishes the obligation of maintaining bank secrecy,
sanctions in case of violations, and special payments to
safeguard the keeping of a secret.
Article 47. Sequestration and Exaction
(1) The property owned by a customer and deposited in
a credit institution can be sequestrated or confiscated
only on the strength of a verdict, or decrees from the
court or criminal investigation establishments, or an
order from the tax administrator, as required by law.
(2) The sequestration is reversed by the body who
hasissued the resolution, decree or order of
sequestration.
(3) Exaction of a customer's property deposited with
a credit institution can be performed only pursuant to
legislation.
Article 48. Protection of a Customer
(1) The relationship between a credit institution and
its customers shall be regulated on the basis of written
contracts.
(2) Each customer is entitled to become familiar with
all the information that banks must disclose under this
Law, and it is the obligation of a credit institution to
provide such information if so requested by a customer.
(3) A credit institution is obliged to give to any of
its customers at their first request complete and
accurate information about all natural and legal persons
which as the main owners (shareholders) hold a minimum of
2% of the credit institution's share capital, as well
as information on the direct and indirect share of each
owner (either natural or legal person) in the share
capital of the credit institution and information about
the executive staff of the credit institution.
(4) A list of transactions or services for which
charges are levied by a credit institution, as well as
all tariffs and interest rates must be displayed in a
visible place in the operations hall of a credit
institution. A customer is entitled to demand that a
credit institution give an explanation and instructions
concerning their applicability.
(5) A credit institution is not allowed to sign
contracts that would entitle it to alter the terms of any
contract unilaterally.
(6) A deposits' insurance scheme shall be
established by a separate law.
Article 49. Ensuring the Competition of Credit
Institutions
(1) It is up to a credit institution to decide whom it
will serve.
(2) Eesti Pank is responsible for monitoring that the
activities of a credit institution fall within the
generally recognised traditions of competition and are in
compliance with current legislation regulating
competition in Estonia.
Article 50. Internal Control of a Credit Institution
(1) An internal control unit shall be established in a
credit institution, consisting of an Internal Controller
and at least two Controllers (members). This unit is
responsible for supervising the current activities of the
credit institution and the compliance of such activities
with the legislation, Decisions of the Board of Eesti
Pank, Decrees of Eesti Pank and other acts of law as well
as good banking practice.
(2) The task of the Internal Control Unit is also to
discover the shortcomings in the activities of the staff
of the credit institution, errors made by them in their
work, breaches of working rules, failure to complete
tasks and instances of staff exceeding their authority,
to point these problems out and to make recommendations
on avoiding them.
(3) The Internal Control Unit shall collect data on
the activities of the credit institution and its staff
(complaints, assessments), make periodical surveys of
such activities which are to be presented to the credit
institution's Chief Executive Officer, Executive Board
or shareholders' general meeting, respectively to the
importance and generality of those surveys.
(4) The Internal Controller and the Controllers must,
when appointed, accept in writing the obligation to keep
secret the information about the activities of the credit
institution that they become aware of, irrespective of
whether such information is positive or negative in its
content, as well as to pass such information on to third
parties only when so ordered by the Executive Board or
the Chief Executive Officer of the credit institution.
(5) The Internal Controller and the Controllers have
the right to become acquainted with all the documents of
the credit institution and to supervise all fields of the
current business of the credit institution. They have the
right to demand that the employees of the credit
institution give written explanations relating to any the
shortcomings or errors that have occurred in their
activities.
(6) The Internal Control Unit operates as foreseen in
the Statutes of the credit institution or its own
Statutes, confirmed by the shareholders' general
meeting. The Internal Control Unit reports to the
shareholders' general meeting and to the Council. The
Internal Controller makes regular reports on any
uncovered shortages and ways of overcoming them to the
Chief Executive Officer and Executive Board of the credit
institution.
Chapter 6
ACCOUNTING AND REPORTING
Article 51. General Regulations on Accounting
(1) In accounting, a credit institution follows the
Accounting Law (RT I 1994, 48, 790), the Law on
Organising Accounting and on Establishing Personal
Responsibility for the Accuracy of Accounting Data (RT I
1993, 43,620), other legal acts of Estonia, instructions
established by Eesti Pank as well as its own Statutes.
(2) A credit institution's accounting must guarantee
the provision of truthful information about its economic
activities and financial status.
(3) The transactions, carried out by a credit
institution, are reflected in accounting on an accrual
basis.
(4) A credit institution shall establish internal
regulations for accounting pursuant to the Accounting Law
and instructions of Eesti Pank.
(5) It is the obligation of a credit institution to
keep account of the claims and liabilities not reflected
in the balance sheet, on off-balance sheet accounts.
(6) Eesti Pank is entitled to a consolidated
accounting from a credit institution and the parties
connected to it. The methods and procedure for compiling
such accounts and the deadline for submission are to be
established by Eesti Pank.
Article 52. Reports
(1) Eesti Pank establishes for credit institutions:
1) content of reporting and the methods of its
compilation;
2) periodicity of reporting;
3) deadlines for reports;
4) structure of the explanatory notes;
5) minimum amount of information to be disclosed
and the deadlines;
6) methods of consolidated reporting.
(2) Eesti Pank is entitled to demand non-regular
reports, broken down by types of transactions.
(3) A credit institution's financial year is the
calendar year. When a credit institution is founded or
liquidated, the financial year may differ from the
calendar year and the duration of the financial year is
established by Eesti pank.
(4) The annual report of a credit institution is
reviewed as foreseen by the Statutes of the credit
institution. A copy of the resolution specifying whether
the annual report was confirmed or not, is presented to
Eesti Pank by 15 April of the year after the financial
year at the latest.
(5) The annual report of a credit institution is
submitted to Eesti Pank by the deadline established by
the latter along with the statement of an independent
auditor.
(6) The annual report of a credit institution
submitted to Eesti Pank must be audited according to
international auditing standards.
(7) It is the obligation of a credit institution to
publish its annual balance sheet and profit and loss
statement in at least one local newspaper.
Article 53. Inspection of Reports
(1) If the reports submitted by a credit institution
are inaccurate or a breach of law in a credit institution
is known of, Eesti Pank has the right to organise a
special inspection of a credit institution and demand
compensation of the inspection related expenses on the
basis of the budget confirmed by Eesti Pank.
(2) Should there be inaccuracies in reporting, Eesti
Pank may demand that the officials of the Internal
Control Unit be suspended from performing their duties,
as well as that a new unbiased auditor be appointed.
Chapter 7
PREVENTION OF MONEY LAUNDERING
Article 54. The Content of Money Laundering
(1) Money laundering means the placement of illegally
acquired money into legal businesses or investments.
(2) It is the obligation of a credit institution to
prevent the usage of the banking system for the purpose
of money laundering.
Article 55. The Obligation of the Identification of
Customers
(1) A credit institution is not allowed to enter into
contractual relations or carry out transactions with
anonymous persons or front operators.
(2) It is the obligation of a credit institution to
identify all the persons who carry out transactions which
exceed ECU 15,000 or cash transactions exceeding ECU
7,500, according to the exchange rate of Eesti Pank.
(3) It is the obligation of a credit institution to
identify the parties concerned even when the amount of
the transaction is lower than the threshold mentioned in
Clause 2 of the present Article if:
1) the transaction appears to be linked with other
transactions involving a sum total that exceeds the
threshold established in Clause 2 of the present
Article. Where the sum is not known at the time the
transaction is undertaken, the identification should
be performed as soon as it has been established that
the threshold has been reached;
2) a credit institution suspects that the money
being the object of the transaction has been acquired
through criminal activity;
(4) If a credit institution knows or suspects that a
customer is a front operator, it must do everything
possible to identify the person on whose behalf the
customer is operating.
(5) By identification this Law means determining in
writing the person's name who carried out the bank
transaction, his/her date of birth and address as well as
the name, number, date of issue and the issuer of the
identification document.
(6) The identification requirement established in the
present Article is not compulsory in cases of:
1) employees who regularly carry out bank
transactions on behalf of the entity they work for
and who have been identified earlier;
2) bilateral transactions between credit
institutions;
Article 56. Preserving Documents
It is the obligation of a credit institution to
preserve the documents that serve as the basis of
transactions mentioned in Article 53, as well as the
written results of the identification of persons related
to them for seven years after the date the transaction
was performed.
Article 57. Disclosure of Information
(1) Information concerning money laundering can be
disclosed only as provided for in Subclauses 1 and 2,
Clause 4, Article 46.
(2) A credit institution shall not inform the
customers concerned about the activities of courts and
investigating bodies or that information has been
transmitted to such institutions.
Article 58. Internal Working Procedure of a Credit
Institution
In order to follow the requirements concerning the
prevention of money laundering, it is the obligation of
the executives of a credit institution to provide working
places with necessary technical equipment and to
establish instructions for the employees as well as
regulations of internal control to check how these
instructions are followed.
Chapter 8
REGULATION OF SUPERVISION
Article 59. The Basis and Limits of Supervision
(1) The activities of credit institutions are subject
to supervision by Eesti Pank. The objective of the
supervision is to guarantee that the establishment and
the activities of all the credit institutions conform
with the existing laws and other legal acts issued on the
basis thereof.
(2) The supervision of credit institutions is
organised by Eesti Pank through Banking Supervision
Department of Eesti Pank and its other departments. If
necessary, Eesti Pank may also involve independent
experts in such operations.
(3) The supervision activities of the Banking
Supervision Department cover:
1) all Estonian credit institutions;
2) subsidiaries and branches of Estonian credit
institutions located in foreign countries;
3) subsidiaries and branches of foreign credit
institutions located in Estonia.
(4) In accordance with international contracts
concluded, Eesti Pank may authorise a foreign banking
supervision authority to inspect a subsidiary or branch
of the corresponding country's credit institution located
in Estonia, as well as a subsidiary or branch of an
Estonian credit institution located in the corresponding
foreign country.
(5) The Banking Supervision Department shall review
the application for establishing a new credit
institution, as well as all the appended documents, will
check and assess their compliance with the requirements
of Chapters 2 and 3 of this Law. If the above mentioned
requirements are fulfilled, the Banking Supervision
Department shall suggest that Eesti Pank issue an
establishing permit and a licence.
(6) The Banking Supervision Department will carry out
continuous inspection of a credit institution's
activities and its standing on the basis of regular
reports submitted by the latter. If necessary, the
Banking Supervision Department is entitled to:
1) demand that a credit institution submit
supplementary information, in order to specify in
detail the information in the reports;
2) demand information from persons who are
shareholders of the credit institution, as well as
from legal persons in which the credit institution is
a shareholder;
3) carry out on-site inspection of a customer of a
credit institution concerning issues resulting from
the relations between the customer and the credit
institution.
(7) The principles and procedures of the consolidated
supervision of a credit institution and parties connected
to it, shall be established by Eesti Pank.
(8) If a credit institution's activities or its
standing do not comply with this Law or other legal acts
issued on its basis or the requirements of the Statutes
of the credit institution, it is the obligation of the
credit institution to inform the Banking Supervision
Department about it, as well as about the measures it
intends to take to resolve the situation.
Article 60. On-Site Inspection of Credit Institutions
(1) The Banking Supervision Department is entitled by
this Law and its own Statutes to carry out on-site
inspection of credit institutions.
(2) When being inspected on site, it is the obligation
of the credit institution to allow the employees of the
Banking Supervision Department and other persons
authorised by Eesti Pank in accordance with this Law:
1) to enter all the rooms of the credit
institution provided all security regulations
established by the credit institution are observed;
2) to use a separate room for performing their
duties. The credit institution shall appoint a
competent representative whose responsibility it is
to provide the inspector will all the necessary
documents and with explanations related to these
documents.
(3) It is the obligation of an inspector to draft a
report about the results of the inspection. The Chief
Executive Officer of the credit institution or a person
authorised by him/her must review this report and so
attest by signing the report.
(4) On the strength of the results of the inspection,
the Banking Supervision Department is entitled:
1) to suggest that any violations of the
requirements of the existing laws and other legal
acts issued on their basis, as well as violations of
the requirements of the Statutes of the credit
institution and other shortcomings that endanger the
activities of the credit institution or the interests
of its customers be rectified, and to monitor the
progress in the rectification of these violations or
shortcomings;
2) demand that a credit institution's
shareholders' general meeting or the meeting of the
Council or that of the Executive Board be convened
announcing in advance which issues need to be
addressed;
3) make suggestions as to how to apply sanctions
foreseen by this Law and check on how they are
fulfilled.
(5) The Banking Supervision Department is entitled to
send its own representative to the meetings of the bodies
of executive and non-executive management and control of
a credit institution, who can present his/her own points
of view and offer suggestions.
Article 61. Special Supervision
(1) If, after reviewing the relevant data, it becomes
clear to the Banking Supervision Department that the
credit institution is not in compliance with this Law or
other legal acts issued on its basis or is not following
good banking practice or does not implement the
instructions imposed by Eesti Pank or suggestions made
regarding reducing costs and thus endangers the assets of
the creditors, the President of Eesti Pank may, with the
consent of the Board of Eesti Pank, establish special
supervision procedures for monitoring the activities of
the credit institution for a fixed period of time.
(2) The objective of the special supervision is to
co-operate with the Executive Board of the credit
institution with a view to improving the economic
condition of the credit institution to guarantee the
safekeeping of its creditors' assets.
(3) Eesti Pank sends a supervising inspector to any
credit institution under special supervision.
(4) In order to carry out the tasks of special
supervision, the inspectors have the following rights in
addition to those provided for in this Law:
1) to supervise on-site all transactions
undertaken, terminated and amended by the credit
institution;
2) to participate in the work of all bodies of
executive and non-executive management and control
and the credit committee of the credit institution;
3) to prohibit the credit institution from
concluding transactions without the written consent
from the inspector;
4) to make suggestions to the executives of the
credit institution regarding the re-organisation of
the activities of the credit institution for the
purpose of more effectively guaranteeing the
protection of its creditors' interests;
5) to suggest to the President of Eesti Pank that
the authority of the executive bodies of the
supervised credit institution be restricted;
6) to suggest to the Board of Eesti Pank that the
special supervision be terminated, a moratorium
established or bankruptcy procedures initiated.
(5) The inspector is obliged to submit to the Board of
Eesti Pank a monthly report on the special supervision.
(6) In order to protect creditors' interests, Eesti
Pank is entitled to restrict the authority of the bodies
of executive and non-executive management and control of
the credit institution during the time it is subject to
special supervision.
(7) In case the inspector is not able to guarantee
that the goals of the special supervision will be met or
if the executives of the credit institution have
reasonable complaints about the activities of the
inspector, the President of Eesti Pank may, by a Decree,
terminate the appointment of the inspector to the credit
institution and appoint a new inspector.
(8) It is the obligation of the President of Eesti
Pank to review the application filed by the credit
institution's executives regarding the withdrawal of
the inspector within one week of the receipt of the
application.
(9) The duration of a special supervision should not
exceed twelve months.
Article 62. Secrecy of Inspection Data
(1) The inspection results of the Banking Supervision
Department are secret and cannot be disclosed without the
authority of the credit institution and any third party
involved. The ban on disclosure established by this Law
for the employees of the Banking Supervision Department
applies during the term of their employment at the
Banking Supervision Department as well as after their
resignation.
(2) The requirement established in Clause 1 of the
present Article does not apply to the consolidated data,
the disclosure of which is compulsory to Eesti Pank by
law.
(3) Disclosure of inspection data is allowed to:
1) a court of law, criminal investigation bodies
or tax administrators if they require it in
connection with a violation of law committed by the
credit institution;
2) employees of Eesti Pank if it is necessary for
fulfilling their duties, provided that the ban on
disclosure applies to them according to the Law of
the Central Bank of the Republic of Estonia;
3) banking supervision authorities of other
countries and persons authorised by them if the
disclosure is bilateral, and provided the ban on
disclosure in Clause 1 of the present Article applies
equally to the above authorities or persons.
(4) When transmitting information pursuant to
Subclause 3, Clause 3 of the present Article, the Banking
Supervision Department shall so inform in advance the
corresponding credit institution.
Article 63. Filing Complaints
(1) If the employees of the Banking Supervision
Department or other persons, authorised by Eesti Pank and
inspecting a credit institution exceed their authority
authorities under the Law of the Central Bank of the
Republic of Estonia (RT I 1993, 28,489; 1994, 30, 436) or
this Law, the credit institution is entitled to:
1) add its comment to the inspection report next
to the signature of the credit institution's
representative;
2) submit a written complaint about the activities
of the inspectors to the President of Eesti Pank
within 10 days of the receipt of the inspection
report;
3) turn to a court of law to resolve the argument.
(2) The President of Eesti Pank is obliged to review
the credit institution's complaint and advise it of
his/her decision within one month of the receipt of the
complaint.
(3) The filing a complaint or applying to the court
shall not suspend the credit institution from its duty to
fulfil resolutions made on the basis of the inspection
results.
Chapter 9
MORATORIUM
Article 64. The
Concept of Moratorium
Moratorium is
the partial suspension of the activities of a credit
institution having solvency problems
with the
objective of establishing the reasons and character of
the problems and taking measures to improve the situation
and protect the interests of the customers.
Article 65.
Enforcement of a Moratorium and its Term of Validity
(1) In case
there is at least one customer whose justified claim
cannot be satisfied within one working day, it is the
obligation of the credit institution to terminate
payments to all customers and to so inform Eesti Pank on
the same day.
(2) If Eesti
Pank finds that the credit institution's solvency
problems are temporary or are not serious enough to
proclaim the credit institution insolvent, it may impose
on the credit institution a moratorium of either limited
or unlimited duration.
(3) The
duration of a moratorium cannot exceed six months.
(4) The terms
and procedures of moratorium as well as the competence of
the moratorium trustee shall be established by Eesti
Pank.
(5) The Decree
of the President of Eesti Pank on the enforcement of the
moratorium must be published in at least one national and
one local paper at the expense of the credit institution
concerned.
Article 66.
Managing a Credit Institution During a Moratorium
(1) Eesti Pank
shall appoint a moratorium trustee who is entitled to
represent, inspect and manage the credit institution and
to stop the implementation of the resolutions of its
Executive Board and Council during the moratorium.
(2) During the
moratorium Eesti Pank is entitled to suspend the bodies
of executive and non-executive management and control of
the credit institution and to temporarily suspend some or
all of the credit institution's executives, as well as
other employees, and temporarily appoint other persons in
their place.
(3) Eesti Pank
will establish the salaries of the moratorium trustee and
the persons replacing the credit
institution's
employees; such salaries cannot exceed those of the
suspended persons and are paid at the expense of the
credit institution under moratorium.
(4) While the
moratorium is in force, the credit institution is not
permitted to complete financial or other property-related
transactions related to commitments made prior to the
effective date of the moratorium.
(5) When the
moratorium is in force, it is the obligation of the
credit institution to realise its assets in the most
profitable way in order to overcome sovency problems and
to place the sums received with credit institutions or
invest in money market instruments authorised by Eesti
Pank.
(6) The
moratorium trustee is accountable to Eesti Pank for
his/her activities.
Article 67.
Forbidden Claims and Fulfilment of Commitments
(1) While the
moratorium is in force, creditors are not entitled to
demand compulsory fulfilment of the commitments the
credit institution has entered into prior to the
effective date of the moratorium.
(2) Courts will
not review, and will return to creditors, any
applications submitted against the credit institution
under moratorium that have been accepted by the latter in
writing.
(3) While the
moratorium is in force, the credit institution's
commitments as well as those of its customers, whose
fulfilment depends on the credit institution under
moratorium, are suspended.
(4) A credit
institution's obligation to calculate and pay fees for
overdue payments is suspended from the effective date of
the moratorium.
(5) From the
effective date of the moratorium until its termination,
the credit institution's obligations to pay debts,
fines and interests are suspended. Payment of debts is
resumed after the termination of the moratorium and after
the credit institution has restored its solvency. While
the moratorium is in force, fines are not imposed,
calculated or paid. Calculation of interests is continued
but they will only be paid pursuant to signed contracts
after the moratorium has been terminated.
(6) The credit
institution commences the fulfilment of all commitments
undertaken by it prior to the effective date of the
moratorium on the day after the moratorium is lifted.
Article 68.
Termination of a Moratorium
(1) During the
moratorium, the moratorium trustee must take a decision
whether the credit institution can continue operating or
whether it should be wound up. On the basis of the
moratorium trustee's report, it is up to Eesti Pank to
decide whether to allow the credit institution to
continue its activities, withdraw its licence, or
initiate bankruptcy proceedings.
(2)
Transactions and other activities carried out during a
moratorium aimed at realising assets pursuant to Clause
5, Article 66 of this Law cannot be reversed during
bankruptcy proceedings.
(3) The
moratorium trustee shall be entitled to apply to Eesti
Pank for the termination of the moratorium earlier than
on the date fixed in advance.
Chapter
10
WINDING UP A CREDIT INSTITUTION'S ACTIVITIES
Article 69.
Methods of Winding Up a Credit Institution's activities
(1) A credit
institution's activities may be wound up:
1) on its
own initiative pursuant to this Law, other laws and
its Statutes (hereinafter: voluntary liquidation);
2) on the
initiative of Eesti Pank or other persons listed in
the law and on the basis of a court order
(hereinafter: compulsory liquidation);
3) in case
of insolvency pursuant to this Law and the Bankruptcy
Law (hereinafter: liquidation due to bankruptcy).
(2) A credit
institution's activities can be wound up through
voluntary or compulsory liquidation provided that it has
enough assets to satisfy the legitimate demands of all
its creditors.
(3) If in the
course of a voluntary or compulsory liquidation it
transpires that a credit institution is insolvent, the
Liquidation Board shall discontinue its activities and
start bankruptcy proceedings after having so informed
Eesti Pank.
(4) The
transactions and other operations carried out by the
Liquidation Board during the liquidation process cannot
be reversed through the bankruptcy proceedings if the
Liquidation Board has sold the relevant assets at an
auction.
Article 70. The
Enactment of the Resolution on Liquidation
(1) The
resolution on liquidation comes into force:
1) in case
of voluntary liquidation - from the day after the
resolution of a credit institution's
shareholders' general meeting has been confirmed by
Eesti Pank;
2) in case
of compulsory liquidation - from the enactment of the
court order;
3) in case
of liquidation due to bankruptcy - from the enactment
of the resolution on bankruptcy.
(2) During the
period of six months after the enactment of the
resolution on voluntary or compulsory liquidation, the
court will return all bankruptcy applications submitted
by creditors without having reviewed them.
Article 71. The
Rights and Obligations of the Liquidation Board and Trustee
in Bankruptcy
(1) After the
enactment of the resolution on liquidation, the
Liquidation Board or trustee in bankruptcy is authorised
to carry out all legal transactions on behalf of a credit
institution that are necessary for winding up the credit
institution's economic activities. No other
transactions are allowed to be concluded.
(2) A credit
institution is not allowed to use its former name without
the attribute "Liquidation Board" or
"trustee in bankruptcy" following the enactment
of the resolution on liquidation.
(3) If the
Liquidation Board or trustee in bankruptcy discovers
indications of criminality in the activities of a credit
institution's executives and employees, it is their
obligation to submit the relevant materials to law
enforcement bodies.
(4) It is the
obligation of the Liquidation Board or trustee in
bankruptcy to submit to Eesti Pank:
1) reports
by the deadlines set by Eesti Pank during the
liquidation process;
2) a full
account of its activities after the work has been
completed.
Article 72.
Requirements Related to the Composition of the Liquidation
Board
(1) The
Liquidation Board shall consist of three persons that are
elected or appointed from among persons who are
experienced in the field of banking or who are law
graduates.
(2) Persons who
may endanger the interests of creditors shall not qualify
for election or appointment to the Liquidation Board.
(3) While a
credit institution is being liquidated the Liquidation
Board deputises for its Chief Executive Officer,
Executive Board and Council by taking over the management
of all affairs from the effective date of the resolution
on liquidation. The authority of the Chief Executive
Officer, Executive Board and Council shall expire from
the same date.
(4) Eesti Pank
is entitled to intervene in the activities of the
Liquidation Board or suspend it, should it have
information that the activities of the Liquidation Board
are not in compliance with existing legislation or that
creditors' claims are not being satisfied objectively.
In such a case, it is the right of Eesti Pank to take the
liquidation proceedings under its full control, appoint a
new chairperson, or replace the members of the
Liquidation Board.
(5) The members
of the Liquidation Board are to be paid at the expense of
the credit institution that is being liquidated, but the
sum total of their salaries must not exceed 2% of the
value of the sold assets.
Article 73. Tasks
of the Liquidation Board
It is the
obligation of the Liquidation Board to:
1) publish
a statement regarding the forthcoming liquidation
proceedings in at least one national and one local
newspaper, setting a term of at least a two-month
from the day the statement is published for the
creditors to submit their claims;
2) list all
claims against the credit institution on the basis of
creditors' written claims, as well as the credit
institution's documents;
3) list and
assess all assets of the credit institution;
4) accept
in-coming sums and call in debts;
5) sell
property and other assets according to Clause 5,
Article 66 of this Law;
6) satisfy
in full the legitimate claims of all creditors;
7) compile
and submit a liquidation balance and reports.
Article 74.
Responsibilities of the Liquidation Board
Members of the
Liquidation Board are jointly responsible for any losses
they may incur by violating or neglecting this Law or the
regulations established by Eesti Pank on the basis of
this Law.
Article 75.
Creditors' Claims and Settling them
(1) From the
date of the publication of the resolution on liquidation,
all creditors' claims are to be considered as having
matured.
(2) Creditors
must inform the Liquidation Board regarding all the
claims against the credit institution that is being
liquidated within the period set out in the published
liquidation statement.
(3) All claims
are to be submitted in writing together with documents
proving the claim. The claim must provide data on the
cause, content and size of the claim.
(4) Justified
claims of creditors are to be settled entirely,
irrespective of their maturities.
(5) Liquid
resources will be set aside for the following purposes:
1) to pay
for transactions for which final settlements remain
to be concluded;
2) to cover
disputed debts;
3) for the
payment of sums not withdrawn by creditors.
These funds
shall be deposited with a credit institution operating in
Estonia.
(6) The balance
remaining after the complete settlement of all claims is
to be divided between the shareholders of the liquidated
credit institution one year after publishing a statement
on the termination of the liquidation in a national
newspaper, provided creditors have not taken any legal
action against that credit institution.
Article 76.
Reports of the Liquidation Board and Termination of its
Activities
(1) The final
report of the Liquidation Board shall be reviewed by an
auditor and approved by the general meeting of the credit
institution's shareholders convened by the Liquidation
Board, as prescribed in the credit institution's
Statutes.
(2) The
resolution on the termination of the liquidation process
shall be passed by the shareholders' general meeting
after the final report of the Liquidation Board has been
approved.
(3) The
resolution of the shareholders general meeting on the
termination of the liquidation procedure shall be
published in "Riigi Teataja Lisa" and the
credit institution shall be deleted from the business
register.
(4) The
documents of the liquidated credit institution to be
preserved shall be turned over to the local archives. The
terms of preservation of the documents shall be
established by Eesti Pank.
Article 77.
Voluntary Liquidation
(1) A credit
institution may wind up its activities through voluntary
liquidation only with the permission of Eesti Pank
pursuant to legislation and its Statutes. A credit
institution must be liquidated if its total own funds
constitute less than the threshold established in Clause
1, Article 27 of this Law and the credit institution has
not been able to restore the required amount of own funds
by the deadline set by Eesti Pank.
(2) The
voluntary liquidation of a credit institution shall be
decided upon at the shareholders' general meeting that
also elects its Liquidation Board.
(3) The
resolution on liquidation shall be made known to Eesti
Pank at least 15 days prior to commencing the liquidation
procedures.
(4) Eesti Pank
shall grant permission for voluntary liquidation of a
credit institution only on the condition that the credit
institution is capable of settling all the creditors'
claims in full.
Article 78.
Compulsory Liquidation
(1) A credit
institution shall be subject to compulsory liquidation
should there be circumstances foreseen by law or the
credit institution's Statutes, the existence of which
obliges the general meeting of the credit institution's
shareholders to pass a resolution on voluntary
liquidation but where such a resolution has not been
adopted.
(2) An
application for compulsory liquidation can be submitted
to court by the credit institution's Executive Board,
Council, a shareholder or Eesti Pank.
(3) Compulsory
liquidation is to be conducted on the basis of the
verdict by the Liquidation Board according to this Law.
The members of the Liquidation Board shall be appointed
by the court.
Article 79.
Liquidation Resulting from Bankruptcy
A credit
institution must be liquidated due to bankruptcy when it
has become insolvent pursuant to Article 9 of the
Bankruptcy Law (RT 1992, 31, 403), but also if there is
at least one customer whose legitimate claim cannot be
settled and if a moratorium has not been declared on the
credit institution.
Article 80.
Submission of the Bankruptcy Petition
(1) Bankruptcy
petitions concerning credit institutions may be submitted
by:
1) a
creditor;
2) the
Liquidation Board according to Clause 3, Article 69
of this Law;
3) Eesti
Pank.
(2) The credit
institution as a debtor cannot submit a bankruptcy
petition. A petition may be submitted by Eesti Pank on
its behalf pursuant to Article 81 of this Law.
Article 81.
Initiation of Bankruptcy Proceedings by Eesti Pank
(1) Eesti Pank
is entitled to initiate bankruptcy proceedings against
credit institutions regardless of whether it is the
corresponding credit institution's creditor.
(2) The
resolution on the initiation of the bankruptcy
proceedings shall be taken by Eesti Pank immediately
after it has accumulated sufficient evidence about the
credit institution's insolvency.
(3) Eesti Pank
shall send its resolution on initiating bankruptcy
proceedings to the court. This resolution replaces the
bankruptcy petition. It must contain all the information,
documents and explanations necessary for the court.
(4) Information
on the resolution to start bankruptcy proceedings shall
be published in one national newspaper and one local
newspaper (in relation to the location of the credit
institution) within 3 days after it has been taken.
(5) The credit
institution's licence expires and the credit
institution shall be liquidated starting from the day
after the resolution on starting bankruptcy proceedings
is taken.
(6) Persons
possessing property belonging to the credit institution
cannot carry out any transactions with it after the
information on the bankruptcy proceedings has been
published in a newspaper.
(7) Every
transaction that has been carried out violating the
provisions of this Law is invalid.
(8) When
initiating bankruptcy proceedings, Eesti Pank is exempted
from the state duty and payment of the expenses
associated with the bankruptcy proceedings.
Article 82.
Preparation and Inspection of Bankruptcy Proceedings
The bankruptcy
petition against a credit institution shall be reviewed
by the court immediately but not later than within 10
days of the receipt of the petition.
Article 83.
Appointment of the Trustee in Bankruptcy
(1) The trustee
in bankruptcy shall be appointed by the court taking into
account the recommendations of Eesti Pank.
(2) When
appointing the trustee in bankruptcy for a credit
institution, the provisions on trustee in bankruptcy of
the Bankruptcy Law are not applicable.
Article 84.
Reorganisation During Bankruptcy Proceedings
During
bankruptcy proceedings, a credit institution can be
reorganised only with the consent of Eesti Pank as
foreseen by this Law and then only through a process of
merger or acquisition.
Article 85.
Compromise
A compromise
during the bankruptcy proceedings of a credit institution
is allowed only with the consent of Eesti Pank.
Chapter
11
SANCTIONS
Article 86.
Illegal Entrepreneurship
(1) By illegal
entrepreneurship this Law means activities of a natural
or legal person in the fields set
forth in
Subclause 1, Clause 1, Article 5 of this Law without a
corresponding licence issued by Eesti Pank.
(2) A person
guilty of illegal entrepreneurship shall be punished
according to the conditions pertaining to the deed based
either on Clause 1, Article 137 of the Administrative Law
or Article 148 of the Criminal Law.
(3) If the
illegal entrepreneurship is being pursued by a legal
person, the Chief Executive Officer shall be punished
according to Clause 1, Article 137 of the Administrative
Law. In the event of a recurrent breach, Eesti Pank is
entitled to turn to the court with the petition on
compulsory termination.
Article 87.
Prohibited Activities
(1) By
prohibited activities this Law means all activities that
are prohibited by this Law and legal acts based on it.
(2) A fine of
up to 200 times daily wages may be imposed on a person
guilty of prohibited activities in accordance with Clause
1, Article 1373 of the Administrative Law. Depending on
the conditions pertaining to the deed, the guilty party
may be punished according to Article 1411 of the Criminal
Law or according to other norms established for crimes
against property or malfeasance.
(3) In the
event a legal person is engaged in prohibited activities,
the Chief Executive Office of such a legal person shall
be punished in accordance with Clause 1, Article 1373 of
the Administrative Law. If prohibited activities
conducted by a credit institution have caused great
property damage or some other serious harm to the
creditors of the credit institution or to other persons,
Eesti Pank is entitled to cancel the licence of the
credit institution and turn to the court with a petition
for the credit institution's compulsory liquidation.
Article 88.
Failure to Submit and Publish Compulsory Information, Reports
and Documents
(1) By
compulsory information, reports and documents, the
present Article means all the reports and documents
mentioned in this Law and other legal acts arising from
it that credit institutions and other persons must submit
to Eesti Pank or other persons mentioned in this Law
following the established procedures and fixed deadlines
or publish them according to the established procedures.
(2) In
accordance with Clause 2, Article 1373 of the
Administrative Law, a fine of up to 100 times daily wages
may be imposed on a person who deliberately does not
submit, refuses to submit, does not publish or submits
incomplete compulsory information, reports or other
required documents or violates the established submission
and publication terms.
(3) In
accordance with Clause 3, Article 1373 of the
Administrative Law, a fine of up to 200 times daily wages
may be imposed on a person who deliberately submits or
publishes untrue compulsory reports, information or
documents.
Article 89.
Violation of the Procedures for Settlement of Accounts
(1) In
accordance with Clause 4, Article 1373 of the
Administrative Law, a fine of up to 200 times daily wages
may be imposed on executives of a credit institution that
violate the procedure of settling accounts.
(2) Deliberate
or unintended overdue settlement of accounts will bring
about the imposition of fees for overdue payment or fines
on the guilty credit institution in favour of the injured
party.
(3) The
penalties for overdue payments are established by Eesti
Pank in accordance with legislation and alongside the
procedures for settling accounts.
Article 90.
Neglect of the Prudential Ratios
If a credit
institution does not follow prudential or other ratios
established by this Law and Eesti Pank, the latter is
entitled to set a higher reserve requirement ratio to the
credit institution concerned.
Article 91.
Ignoring or Incompletely Fulfilling of Instructions
If a credit
institution ignores or incompletely fulfills the
instructions Eesti Pank issued pursuant this Law and the
Law on the Central Bank of the Republic of Estonia the
executives of the credit institution may be imposed a
fine of up to 200 times their daily wages in accordance
with Clause 5, Article 1373 of the Administrative Law.
Article 92.
Obstruction of the Activities of the Inspectors of the
Banking Supervision Department or Other Persons Commissioned
by Eesti Pank and Carrying Out Inspection
Pursuant to
Clause 6, Article 1373 of the Administrative Law a fine
of up to 100 times daily wages shall be imposed on any
person who obstructs the carrying out of inspections
pursuant to this Law, or refuses to give or submit
documents, information or explanations relevant for the
inspection, or does not submit them on time, or submits
inaccurate or untrue data, information or explanations;
alternatively it may be suggested by Eesti Pank that the
guilty person be suspended from performing his/her duties
until the employer decides whether terminating the
employment contract with such a person may be
appropriate.
Article 93.
Sanctions to Protect the Interests of Creditors
(1) On the
basis of the results of the inspection of a credit
institution, Eesti Pank is entitled to make the following
compulsory prescriptions to the credit institution to
protect the interests of creditors:
1)
temporary increase or decrease in prudential ratios
listed in Chapter 5 of this Law;
2) partial
or complete suspension of granting loans for up to 3
months;
3)
suspension of foreign settlements for up to 3 months;
4)
restriction on taking external loans;
5)
suspension of the credit institution's executives
from performing their duties should Eesti Pank
determine that they are unsuitable for their position
or that they have lost credibility until such time as
the employer decides on terminating the employment
contract with them;
6)
restriction on profit distribution.
(2)
Restrictions on transactions are established by a Decree
of the President of Eesti Pank.
(3)
Instructions issued by Eesti Pank are compulsory for the
credit institution and must be implemented by their
deadline. If they are not implemented in time or not as
required, the sanctions listed in Article 91 of this Law
can be applied.
Article 94.
Suspension from Duties of the Members of the Executive Board
and Council as well as Other Executives of a Credit
Institution
(1) Eesti Pank
may suggest to a credit institution or its owners that
all or some of the members of the Executive Board or
Council or other executives who are guilty of violations
of legal acts be suspended from managing the credit
institution.
Article 95.
Pre-Emption and Termination of Illegal Entrepreneurship and
Prohibited Activities
(1) Banking
Supervision Department is entitled to demand, and it is
the obligation of enterprises,
institutions,
organisations and natural persons to submit to the
Banking Supervision Department by the deadline
established by the latter, information and documents
concerning specific business activities provided that the
Banking Supervision has evidence or information that the
above-mentioned persons are involved in illegal
entrepreneurship or prohibited activities in accordance
with Article 86 and 87 of this Law.
(2) If an
inspection proves involvement in illegal etrepreneurship
or prohibited activities mentioned in Articles 86 and 87
of this Law and thus threatening the stability of the
currency system, it is the obligation of Eesti Pank to
submit a petition to law enforcement bodies suggesting
that the guilty parties be prosecuted.
Article 96.
Violation of the Obligation to Keep Bank Secrecy
(1) Unlawful
disclosure or spreading of bank secrets will result in
legal action against the offender or disciplinary
punishment pursuant to legislation.
(2) A fine of
up to 200 times daily wages shall be imposed on a credit
institution's executive who is guilty of not drawing up
the contract as required in Clause 8, Article 46 of this
Law.
(3) Property
damage caused by illegal disclosure or spreading of bank
secrets at the disposal of the credit institution, by the
persons listed in Clause 1, Article 46 of this Law, shall
be compensated to the customer in full by the credit
institution. After compensation the credit institution
must file a corresponding claim against the offender who
compensates the damage in accordance with the Law on
Labour.
Article 97.
Failure to Follow the Regulations on the Prevention of Money
Laundering
If an executive
or another employee of a credit institution fails to
follow the regulations on the prevention of money
laundering, they shall be punished in accordance with the
Law on Disciplinary Responsibility (RT I 1993, 26, 441)
or as a criminal offence with a fine of up to 200 times
daily wages with or without cancelling his/her right to
be employed at a certain position or in a certain field.
Article 98.
Competent Administrative Body
(1) In addition
to the bodies fixed in the code of violations of
administrative law, the Banking Supervision Department is
entitled to prepare a statement regarding the violation
of this Law which serves as a foundation for an
administrative judge when considering a penalty.
(2) The fines,
called in by this Law, shall be trandferred to the state
budget.
Chapter
12
IMPLEMENTATION OF THE LAW
Article 99.
Procedure and Deadlines of the Implementation of the Law
(1) The
operating credit institutions shall bring their
activities and documents in line with this Law by the
time it comes into force, except for the following
provisions for which the deadlines below are established:
1) Clause
1, Article 3; Cl.10, Art.5; Subclauses 2-4, Cl.2,
Art.14; Cl.1, Art.15; Art.23; Art.24; Cl.3, Art.27;
Cl.1, Art.29; Cl.2,3,4,6, Art.39 - within six months
of the enforcement of this Law;
2) Clause
2, Article 25; Art.41; Art.50 - within three months
of the enforcement of this Law;
3) Clause
1, Article 27; Cl.1, Art.35 - by 1 January 2000;
4) Clause
2, Article 37; Cl.4, Art.37 - by 1 January 1998;
5) Clauses
4-8, Article 40 in case of loan agreements signed
before this Law is enforced - by 1 January 1996
according to the procedure established by Eesti Pank;
6) Clauses
2, 4, Art.42 - by 1 January 1996.
(2) Creditors
must notify to the Liquidation Board about all their
claims against the credit institution to be liquidated
within the term established in the published statement on
liquidation.
(3) The
procedures for implementing Subclause 3, Clause 1 of the
present Article shall be established by Eesti Pank.
(4) Not later
than within three months from the date of enforcement of
this Law a list including all circumstances and
commitments that are not in conformity with this Law and
that the credit institution cannot eliminate or bring
into conformity by the deadlines specified in Clause 1 of
the present Article has to be submitted to Eesti Pank
together with a schedule for eliminating or bringing into
conformity of those circumstances and commitments.
(5) Eesti Pank
shall be obliged to organise the drafting of the law
mentioned in Clause 6, Article 48 of this Law and to
submit the above draft law to the Government of the
Republic not later than by 1 June 1995.
(6) Eesti Pank
is entitled to give explanations and instructions
concerning the implementation and interpretation of this
Law.
Article 100.
Amendments to the Criminal Law
The Criminal
Law (RT 1992, 20,288; 1993, 7, 103; RT I 1993, 33, 539;
43, 620; 49, 693; 1994, 12, 202; 16, 290; 24, 291; 30,
46; 39, 620; 50, 845) shall be supplemented with Article
1488 in the following wording:
"Article
1488. Failure to Follow the Regulations on the Prevention
of Money Laundering
If an
executive or another employee of a credit institution
fails to follow regulations regarding the prevention
of money laundering - they shall be punished with a
fine with or without cancelling his/her right to be
employed at a certain position or in a certain
field."
Article 101.
Amendments to the Administrative Law
The
Administrative Law (RT 1992, 29, 396; 1993, 7, 103; RT I
1993, 33, 539; 44, 637; 62, 891; 72/73, 1019; 1994, 1, 5;
12, 202; 23, 385; 24, 391; 28, 424 and 427; 34, 532 and
534; 39, 620; 46, 773; 48, 789; 50, 845; 74, 1324) shall
be amended and supplemented as follows:
1) Article 21
shall be supplemented with Clause 8 in the following
wording:
"8)
When implementing the sanctions established in the
Law of Credit Institutions the fine is calculated on
the basis of the guilty party's daily wage, the size
of which is established by dividing his/her previous
month's salary with 30 and not taking into account
the fractions.";
2) the law
shall be supplemented with Article 1373 in the following
wording:
"Article
1373. Breach of the Law of Credit Institutions
(1) For
prohibited activities as stipulated for in the Law of
Credit Institutions - a fine of up to 200 times daily
wages of the culprit shall be imposed.
(2) For not
submitting or not publishing compulsory information,
reports and documents or for violating the
established submission and publication terms as
stipulated for in the Law of the Credit Institutions
- a fine of up to 100 times daily wages of the
culprit shall be imposed.
(3) For
deliberately submitting or publishing false
compulsory reports, information or documents on a
credit institution - a fine of up to 200 times daily
wages of the culprit shall be imposed.
(4) For
violating the procedures for settling accounts by a
credit institution's executive - a fine of up to
200 times daily wages of the culprit shall be
imposed.
(5) For
ignoring or incomplete fulfilling of the instructions
of Eesti Pank by the credit institution's executive
- a fine of up to 200 times daily wages of the
culprit shall be imposed.
(6) For
obstructing the implementation of inspections
established by the Law of Credit Institutions,
refusing to give or submit documents, information or
explanations relevant for the inspection, not
submitting them on time, submitting inaccurate or
untrue data, information or explanations - a fine of
up to 100 times daily wages of the culprit shall be
imposed.
(7) For not
drawing up by the executive of the credit institution
the contract in conformity of the requirements
established in Clause 8, Article 46 of the Law of
Credit Institution - a fine of up to his/her 200
times daily wages shall be imposed.";
3) The list
established in Clause 1, Article 186 shall be
supplemented with Article 1373.
4) Clause 1,
Article 228 shall be supplemented with Subclause 24 in
the following wording:
"24)
Banking Supervision - Article 1373."
Article 102.
Implementation and Invalidity of Earlier Legal Acts
(1) Legal acts
that have regulated the activities of credit institutions
up to now are implemented as long as they are not in
conflict with this Law, except for the cases stipulated
in Clause 2 of the present Article.
(2) The
liquidation of a credit institution that has been
initiated before this Law is enforced shall be concluded
pursuant to the procedure in force prior to this Law
coming into effect.
(3)
Acknowledgement of invalidity: the Bank Law of the
Republic of Estonia (ENSV Teataja 1989, 41, 647; RT 1990,
2, 36; 1991, 16, 222; 1992, 31, 411).
Chairman of
Riigikogu Ü.Nugis
In Tallinn, 15 December 1994
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