Estonian Financial Institutions Remain Vulnerable to Money Laundering
Tallinn, Estonia - A recent report has highlighted the ongoing threat of money laundering in Estonia’s financial institutions, with credit institutions, virtual asset service providers, and company service providers being identified as the most at-risk sectors.
High-Risk Sectors
Credit institutions are still not fully complying with reporting obligations and have a higher risk appetite than would be allowed by risk controls. This has led to the identification of several cases of money laundering associated with credit institutions.
Virtual asset service providers, which have seen a significant decrease in authorizations over the past year, remain a key area of concern. While the volume of transactions has decreased slightly, the number of external inquiries and references to Estonian service providers operating illegally has increased.
Company service providers are also identified as a high-risk sector, with many failing to implement due diligence measures and report suspicious transactions. This has led to concerns that some companies may be used for criminal purposes in other countries.
Cases and Convictions
In 2023, four county court judgments convicting 14 people of money laundering entered into force in Estonia. All cases involved business email compromise (BEC) fraud as the predicate offence for money laundering. The convicted persons aimed to conceal the illicit origin of the money and integrate it into the legal economic circuit.
Key Findings
- Credit institutions remain vulnerable to money laundering due to inadequate reporting obligations and high risk appetite.
- Virtual asset service providers continue to be a key area of concern, with decreased authorizations but increased external inquiries and references to illegal operations.
- Company service providers are identified as a high-risk sector, with many failing to implement due diligence measures and report suspicious transactions.
- BEC fraud is increasingly being used as the predicate offence for money laundering in Estonia.
Action Required
To prevent and detect money laundering in Estonia, the following actions are required:
- Financial institutions must increase their vigilance and reporting obligations.
- Regulatory bodies must strengthen oversight and enforcement of financial institutions to prevent money laundering.
- Company service providers must implement robust due diligence measures and report suspicious transactions.
The full report can be accessed at [insert link].