Luminor notified its clients that as of January 1, 2019 the bank would be closing the accounts of Estonian e-residents.
Hannes Oja, head of Anti-Money Laundering at Luminor Estonia, said that based on the Money Laundering and Terrorist Financing Prevention Act, banks were required to update the data of all of their customers.
As a result, all existing clients have to do so themselves on a regular basis. Non-resident clients, however, have to answer additional questions regarding their business activity and the origin of their transactions.
“We always remind clients via various channels (email, mail, phone, online bank) to update their information,” Oja explained. “If a client nonetheless consistently fails to update the information or is unable to substantiate the origin of transactions and movement of money tied to the business activity, then we are obligated to end the customer relationship. This is in accordance with the Money Laundering and Terrorist Financing Prevention Act.”
He also noted that in offering its services, Luminor was focused first and foremost on the local, Baltic market, which is why the bank expected its clients’ activity to be tied to the local economic space. As e-residency is not equivalent to Estonian citizenship and all e-residents have to undergo checks, the bank is unable to offer the requested services if it is not provided with sufficient information from its clients.
Arnaud Castaignet, head of public relations for the e-Residency program, admitted that as banks had become stricter in implementing their know-your-client policies, those non-residents who had no demonstrable ties to Estonia had for some time already faced difficulties in opening and holding accounts with banks located in Estonia, which is why many e-residents opted instead to open accounts with foreign payment institutions such as Holvi and Transferwise.
At the beginning of 2018 Swedbank and other banks operating in Estonia closed the accounts of e-residents on a large scale, justifying the move with both tightened regulations as well as the fact that e-residents have to prove their business ties to Estonia. (ERR/Business World Magazine)