Virtual asset service provider linked to online fraud loses license
The Financial Intelligence Unit (FIU) has revoked the authorization of Izbits OÜ, a virtual asset service provider whose activities include dealing in crypto currency, citing inadequate compliance with regulations and links to criminal activity. The company has also been placed on a sanctions list in the United States.
Izibits OÜ was doing business at a time when it should not have provided the service and when it did not meet the applicable requirements provided for by law, the FIU says.
The company also did not respond to inquiries from the agency, and Izibits' license has now been withdrawn.
Meanwhile, U.S. authorities have added Izibits OÜ onto their OFAC sanctions list.
The U.S. authorities linkted Izibits to virtual currency platform Chatex, which has reportedly been involved in ransomware attacks and potentially other financial crimes.
Matis Mäeker, FIU head, said that: "There are around 400 Estonian licensed virtual asset service providers. A number of these have weak ties to Estonia and may negatively impact Estonia's reputation and the economic space. We have been seeing a tendency for increased risks, which are often materializing. The case of Izibits OÜ is one example of this."
Mäeker said international cooperation was crucial to separating honest businesses in the sector from service providers with malicious intentions.
"This case, which, in cooperation with the U.S. authorities, succeeded in identifying and sanctioning a network that facilitates financial crime, is a clear example of the swift and decisive response we are giving to financial crime," Mäeker went on.
"Estonia supports the U.S. in its fight against financial crime, in particular with ransom demands," he added.
The FIU identified risks in the sector of virtual currencies for the first time in its annual review for 2018, calling for quick changes in the regulations of the sector.
The Riigikogu adopted the necessary amendments in December 2019, and regulations were tightened for virtual currency service providers in Estonia, BNS reports.
The FIU's risk assessment in 2020 and follow-up analysis in 2021 confirmed that the amendments were not sufficient for addressing the piling and continuously growing risks.
High risks related to the service providers of virtual currency were also pointed out in the National Risk Assessment compiled by the Ministry of Finance.
The FIU is an independent government agency in the area of administration of the Ministry of Finance, and has operated separately from the Police and Border Guard Board since 2021. Its main task is to prevent money laundering and terrorist financing in Estonia.
Mäeker recently called for a cull of cryptocurrency license holders in Estonia.
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Editor: Andrew Whyte