Estonia Clamps Down on Crypto Criminals

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  • Estonia is to start cracking down on crypto companies following a Danske Bank scandal in the country
  • Authorities suspect that companies are using their Estonian base for illegal overseas operations
  • The country has lost over 500 licensed companies with another 500 potentially on the way out

Estonia is to start clamping down on cryptocurrency companies following reports of billions of dollars’ worth of illicit cash being laundered through the local branch of Denmark’s largest lender Danske Bank A/S. The European nation, which was among the first to regulate cryptocurrency activities in 2017, has now turned its attention to rooting out crypto companies who could be performing similar activities abroad.

500 Licenses Lost in Cull

Bloomberg reports that Estonian authorities have reason to believe that some crypto companies are using their local presence to help commit fraud elsewhere, and have already stripped more than 500 of their permits this year. This represents a third of the total number of registered crypto entities in the country, according to Madis Reimand, head of Estonia’s Financial Intelligence Unit.

Estonia’s financial authorities have targeted companies that failed to start operations in the country within six months of obtaining a permit, with the issuance of the permits themselves now coming under suspicion after warnings of a surge in 2018. In its rush to be crypto friendly the country was accused last year of “giving out those permits too easily to God knows what companies” by Andre Nomm, a member of the Estonian Financial Supervision Authority’s management board. Nomm also said at the time, correctly it seems, that these licenses had been used to “create credibility for some evil schemes.”

Estonia May Lose Another 500 Crypto Companies

It is estimated that more than a half of the remaining 900 license-holding crypto companies have no operations inside Estonia and therefore may lose their licenses, according to Reimand. The managers of these companies reside and operate overseas, a state of affairs that has now caused great concern within the Estonian financial authorities.

It seems that in its clamour to establish itself as a blockchain hub, Estonia may have put the cart before the horse and as a result has a lot of cleaning up to do to repair the damage.