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Estonia: crypto companies created thanks to the e-residency increase money laundering risks
Estonia: crypto companies created thanks to the e-residency increase money laundering risks
Crypto

Estonia: crypto companies created thanks to the e-residency increase money laundering risks

By Marco Cavicchioli - 2 Feb 2019

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The Estonian e-residency programme has become a target for the fight against money laundering in Estonia, especially for crypto companies.

The programme provides for the possibility for anyone to apply for some sort of “electronic citizenship” in Estonia and this also allows them to access some online services such as banking.

Estonia is a member of both the European Union and the Eurozone and anyone can apply for its e-residency, including citizens of countries subject to US sanctions such as Iran and North Korea.

Thus, Estonian banks, including the leading local credit institution LHV, allow foreigners with e-residency to open bank accounts in the country as long as they show that they have business interests in Estonia.

There are currently 50,000 foreigners with e-residencies in Estonia, but there is no data available on the number of bank accounts opened by these people.

However, Erki Kilu, Managing Director of LHV, said that although only a small number of e-residents have opened a personal bank account in Estonia, many of the 6,000 companies registered by e-residents in the country have done so.

These customers would have been officially checked and, at least to date, there have been no problems with the financial activities of those accounts. However, Madis Muller, Deputy Governor of the Central Bank of Estonia, told Reuters:

“There is a money laundering risk with cryptocurrency operators. We have made it too easy for these crypto operators now. They get a reputational benefit from their link to Estonia”.

As a result, legislators are considering asking the police to check crypto-based companies and withdraw their licenses if reputation and ability tests fail.

According to some proposals submitted to the Estonian Parliament, these companies may also be required to have a physical commercial presence in the country.

Muller himself admits that most of them would probably not be able to meet these new requirements and could therefore not maintain their license.

Madis Reimand, head of the Estonian Financial Intelligence Unit (FIU), said that the owners of the e-residency do not represent “big risks”, but he is still very critical of cryptocurrencies, which he considers a potential big threat to risks related to fraud and money laundering.

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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