The Tallinn-based cryptocurrency exchange has been restricted from operating due to violating AML and KYC requirements.
According to the official report by the Financial Intelligence Unit (FIU) of Estonia, the regulator authority has noticed "systemic and systematic deficiencies and activities" that were happening within the Garantex crypto exchange.
More specifically, the FIU revealed that Garantex lacked user registration requirements, oversight, personnel which may potentially enable money laundering and terrorist financing operations within the exchange.
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Even more so, according to the FIU, over 90% of registered users on Garantex did not verify their identities but were still able to use the financial services provided by the crypto exchange.
In fact, several wallets had been moving millions of euros through Garantex, and some of them were even linked to known criminals. However, the crypto exchange failed to notify Garantex about the volume and value of transactions that were being moved around.
Director of the Financial Intelligence Unit Matis Mäeker spoke on the operations within Garantex, stating:
"Garantex Europe OÜ clearly stood out from others because its annual transactions amounted to more than 5 billion euros and a large part of the business and customers were related to Russia and other high-risk countries."
Other cryptocurrency exchanges have also been in a similar situation after not securing proper KYS and AML requirements for their customers. One of the founders of crypto exchange BitMEX was indicted for failing to implement a proper anti-money laundering system.
