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Dirty money risks encroaching on Estonia’s digital utopia

[Published: 2019-02-06T01:21:03Z] [Author: Reuters] [Powered by:]

Estonia’s push to become a digital society has left it vulnerable to dirty money and sanction breaches, the country’s top banking regulator has warned.

The Baltic state took center stage in one of the largest-ever money laundering scandals last year - the Estonian branch of Danske Bank helped funnel money from Russia and other ex-Soviet states, a report by the Danish lender showed.

Danske Bank is now being investigated in Denmark, Estonia, Britain and the United States over the 200 billion euros ($227 billion) of suspicious payments.

The Danske debacle was rooted in old school subterfuge – offshore shell companies were used to disguise where the money was coming from.

But Estonia’s population of e-residents, some of whom bank in the country even though they live abroad, potentially offers a high-tech route for suspect funds.

“The lesson of Danske is, I hope, enough for us,” Kilvar Kessler, the head of Estonia’s financial watchdog, the Finantsinspektsioon, told Reuters. “You onboarded customers which were offshore companies.”

“Now e-residents. Exactly the same questions will be asked. Who are they? Why do they need a bank account in Estonia?”

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