Clients of Estonia’s E-Residency Project Linked to Crypto Scams
29 Sep 2020

Foreigners granted remote access to Estonia’s digital infrastructure through its e-residency program are being linked to crypto-currency frauds abroad, threatening efforts to repair the Baltic nation’s image after one of Europe’s largest money laundering scandals.

Companies registered overseas and headed by Estonian e-residents have been involved in “a few large-scale exit scams,” the police’s Financial Intelligence Unit said last week in a report, referring to a form of deception where clients are unable to withdraw their assets.

Estonian firms and e-residents have also been linked to organizing “suspicious initial coin offerings and the misappropriation of large sums within them,” it said, citing cooperation with counterparts abroad.

The report casts a shadow over the digital aspirations of Estonia, a nation of 1.3 million people that helped to create Skype and pioneered Internet voting. About 70,000 digital IDs have been issued to e-residents from 174 countries since the government-sponsored program began in 2014. It’s most popular among citizens from Finland, Russia and Ukraine.

Dirty-money scandals that have dented Estonia’s reputation in recent years have also weighed on the program, with issuance down from its 2018 peak as banks closed e-resident accounts or refused to open them because business links to Estonia were lacking.

Reputation Risks

The e-residency team is working “hand in hand” with the police and the FIU, according to its head, Ott Vatter. “The survey doesn’t show that all fraudsters have been e-residents, but that there have also been e-residents among fraudsters,” he said.

By Ott Ummelas, Bloomberg, 28 September 2020

Read more at Bloomberg

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet

FREE CPD Wallet