For a long time, Estonia has been threatened and is still threatened by the risk of cross-border money laundering and terrorism financing. The most exploited method in Estonia is opening accounts or wallets to move criminal proceeds. A third of all cases are related to Estonian companies, through which crimes are committed in foreign countries or activities related to such crimes are performed. In the latter situation, the most frequent cases are when a company is established in Estonia, and behind it is a foreign citizen who has no connection with Estonia.
More than a fifth of Estonian companies are connected to foreigners, of which 6% are connected to individuals from countries with a higher risk of terrorism financing. The above means that we have largely opened our business environment to non-residents, who often do not have connections with Estonia. To a significant extent, such companies also show signs of a higher risk of money laundering and terrorism financing.
"The Financial Intelligence Unit established that foreign persons play an important role in the Estonian business environment. However, in at least a quarter of the cases, we do not know what their activities are, because they do not submit annual reports in Estonia. The activity indicators of operating in Estonia are the lowest for companies of foreigners connected to company service providers and for companies connected to persons from countries with a higher risk of terrorism financing. It is difficult to understand why it is necessary to establish a company in Estonia in such a case. It is a considerable risk for the country if we do not know who is actually using our business environment and for what purpose," said Toomas Plaado, Deputy Head of the Financial Intelligence Unit.
Out of 80 000 foreign-connected companies, 12 000 are related to companies with a company service provider license.
"We discovered that non-residents are also offered the service of concealing a board member, an actual beneficiary and a shareholder. Also, the reporting activity of company service providers is too low – only 4% submitted reports to the Financial Intelligence Unit in 2023, among which there were no reports of suspected terrorism financing," said Plaado.
