Ministry sheds light on US law firm Estonia money laundering work

The "Superministry" complex in Tallinn. Source: Siim Lõvi/ERR

The Ministry of Finance has commented on how a controversial deal which brings representation for Estonia from an American law firm in money laundering investigations would work.

The ministry says Freeh, Sporkin & Sullivan's work on behalf of the Estonian state has three distinct stages, making use of domestic does including the police, and also those in the U.S.

A confidential, two-year, €3-million deal signed between Freeh, Sporkin & Sullivan was announced in early July and hit controversy about its use of taxpayer funds and allegations of conflict of interest given the firm had worked for a Russian alleged money launderer, some of whose funds had been chanelled via a bank in Estonia.

Arguments in favor of using the firm, whose senior partner, former FBI director Loius Freeh, has quit, though he continues to represent Estonia, are that the country may be able to get a slice of any damages arising from money laundering cases in the U.S., resulting from damage to Estonia's international reputation caused by the Danske case – which saw up to €260 billion in potentially illicit funds pass through the bank's Tallinn branch 2007-2015 – and other cases.

Three-stage process

The first stage involves assessing the starting points of an investigation procedure and the establishment of an action plan and co-operation relations with the Estonian authorities, including the Financial Supervision Authority, the Ministry of Justice, the prosecutor's office, the Police and Border Guard Board (PPA) and the Money Laundering Information Bureau (Rahapesu andmebüroo).

The second stage involves Louis Freeh or Freeh, Sporkin & Sullivan assisting and advising the Estonian authorities in the investigation procedure. 

The third stage sees support in negotiations with the U.S. authorities and in concluding an agreement on the transfer of portions of U.S. money laundering fines found to be due to Estonia.

The authorities in America include the Department of Justice and Finance, banking regulators, the Securities and Exchange Commission (SEC), and the New York State Department of Financial Services.

In addition, information would be exchanged with authorities in Sweden, Denmark, Germany and other countries.

This system helps to ensure that financial institutions involved in money laundering are responsible for their actions and compensate for the financial and reputational damage caused to Estonia, the ministry argues.

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Editor: Andrew Whyte

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