Money Laundering Data Bureau seeks powers back from parliament

Estonia’s Money Laundering Data Bureau wants parliament to restore its access to information needed to investigate money laundering and tax fraud, ERR reports.

The bureau’s ability to work has been significantly restricted since it lost the right to request data through the enforcement register, a register used to access information related to enforcement proceedings.

If €700,000 had been defrauded from the Finnish Artists’ Association instead of the Estonian Artists’ Union and then transferred to an Estonian bank account, the bureau’s ability to help its Finnish counterparts would have been limited, bureau head Matis Mäeker said.

“We would tell Finland that we are very sorry, but we cannot tell you where the money went or whether it is still in that account,” Mäeker said.

For more than a year, neither the Money Laundering Data Bureau nor the Tax and Customs Board has been able to request data through the enforcement register to prevent tax fraud or money laundering.

Justice and Digital Minister Liisa Pakosta suspended the right last summer. This followed a review by the office of Chancellor of Justice Ülle Madise, which found that the bureau could access people’s or companies’ bank account statements through the register without a proper legal basis or the account holder’s consent.

The Chancellor of Justice said bank statements contain extensive personal information. If the state wants to give an authority such as the Money Laundering Data Bureau access to such information, parliament must make that decision and it must be preceded by a proper analysis.

LHV bank has decided not to provide bank statements to the bureau at all, saying the bureau has no right to request them. Tallinn Administrative Court ruled in the spring that the bank was entitled to make that decision. The bureau has appealed the ruling.

Mäeker said international cooperation on money laundering is based on trust and reciprocity. If Estonia cannot help its partners in time, this will eventually affect Estonia itself.

“If you are a good partner, you receive replies faster; if you are a worse partner, replies come more slowly. The situation now is that we cannot answer all questions because we do not have the right to request the data or the ability to obtain the information from all banks,” Mäeker said.

Speed is crucial in this field. Mäeker described a case in which defrauded money was transferred to another country one day and, by the following day, had been distributed among accounts at 14 different credit institutions.

“The more days pass, the more likely it becomes that recovering the money will be extremely difficult,” he said.

Bureau sends emails asking whether money laundering controls work

The bureau’s powers were also significantly curtailed by a Supreme Court ruling in January.

The ruling created a situation in which the bureau cannot physically visit a bank branch or, for example, a gambling company to observe how it operates and verify that the money laundering rules the companies say they follow are actually being followed.

“At present, we send them individual emails and ask: are you sure your systems for preventing money laundering are working?” Mäeker said.

Madise could, if elected president, promulgate or veto a law addressing the problems related to the enforcement register that she highlighted while serving as Chancellor of Justice.