Don’t try to launder money here – POLITICO

FRANKFURT — If Russian oligarchs try to launder their money to circumvent sanctions, they won’t stand a chance in Estonia, according to the country’s central bank chief.

Estonian banks and authorities have been doing everything they can to weed out illicit money after the country’s reputation was tarnished by a scandal, Madis Müller told POLITICO.

“I think everyone is now very careful in managing anti-money laundering risk,” Müller said, citing the “bad publicity” associated with his banking practices.

Estonia has long struggled with money laundering, but was particularly damaged by the Danske Bank case, the biggest such scandal ever in Europe. From 2007 to 2016, Denmark’s largest bank failed to track €200 billion in illicit funds – much of it originating in Russia – funneled through its branch in Estonia.

The scandal still resonates today, Müller said.

“Resources to deal with [anti-money laundering] risks have been significantly increased in commercial banks, [financial supervisor] and the Financial Intelligence Unit,” he said, adding that this effort extends to cooperation with Nordic supervisory authorities, which are not part of the Single Supervisory Mechanism (SSM).

“It is safe to say that money laundering problems in the Estonian banking sector are now a thing of the past,” he added.

At this point, Müller is more concerned about the Russians turning to the global crypto asset market, as a way to both launder money and avoid sanctions.

“It is important that not only us in Estonia – but in general in Europe and the world – can control the points of interaction between digital assets and the traditional financial system,” he said. “This [way] no one would be able to convert crypto assets into official currency without properly identifying themselves and also without being able to prove the source of those assets.”

Similar comments came from European Central Bank President Christine Lagarde on Tuesday when she said she was “very concerned” about what she sees as the high volume of rubles being converted into crypto assets since the West hit Russia with a barrage of financial sanctions.

Others are more optimistic. EU and US officials have questioned the extent of the risk and do not see crypto assets as a major means of circumventing sanctions, in part because they cannot easily hide financial flows massive consequences that circumventing the sanctions would entail.


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