Estonia is known to have a very liberal licensing regime for multiple crypto companies for defrauding investors and committing other crimes, as per an investigative report. The authors mention that they explored dozens of cases like that, including schemes and scams for money laundering and sanctions evasion.
Since Tallinn began tightening its rules, most of these entities have managed to leave Estonia, whose primary banking sector was actually accused of very similar sins in recent years, and that too on a bigger scale.
Estonia-Based Crypto Platforms Facilitated Fraud As Per Reports(?)
Previously, Estonia’s lax requirements for cryptocurrency businesses looking to provide multiple EU-licensed services turned the small Baltic nation into a primary ‘hub of financial crime,’ as per research conducted in detail by Visquare, a detailed network of multiple media outlets focussed primarily on cross-border investigations in the central part of Europe.
The journalists mentioned that this particular week, they managed to analyze three hundred of these companies. In the process, they came across plenty of cases, including fraud, sanctions evasion, money laundering, and illicit financing of paramilitary as well as criminal organizations, like the ones participating in a bitter conflict in Ukraine.
Tallinn-based authorities introduced a licensing system that is crypto-friendly way back in 2017 in order to attract multiple businesses dealing with various digital assets. Over the past years, the number of different licensed entities within the sector exceeded 1600.
However, over a third of them actually used the basic services of only three organization formation agencies.
These agencies provided local specialists for the different roles of AML (anti-money laundering) executives and officers. Among them, a welder banned from welding, a person staying in a home funded by the state, an out-of-job plumber, and a cab driver who is in debt were collectively held responsible for over sixty firms.
As per reports, such Estonia-based companies hiring actors created multiple fake profiles with links to intelligence services in Russia and even their sanctioned banks. These companies are responsible for dozens of international frauds, leading to an estimated damage of more than a billion dollars.
However, since Estonia ended up tightening its rules for the whole industry with multiple amendments to its Money Laundering and Terrorist Financing Prevention Act that first came into effect in March 2022, multiple cryptocurrency companies have ended up losing their licenses.
As a result, they moved to other Europe-based jurisdictions, such as neighboring Lithuania. This particular Baltic nation is actually home to more than 800 firms working with multiple digital assets.