Addressing the Estonian Banking Association this January, Chancellor of Justice Ülle Madise said, that she had received a number of complaints regarding the closures of people's bank accounts without clear justification. In Madise's view, the problem of accessing basic payment services, which this creates, is a breach of individuals' fundamental rights.

The Chancellor of Justice's office did not specify how many complaints had been received in relation to such issues. However, business adviser at the Chancellor of Justice's office Karolin Soo, said that there had been enough to recognize the scale of the problem.

According to Bank of Estonia (Eesti Pank), 57,000 private accounts were closed in 2020, while more than 130,000 current accounts were shut down in 2021.

Eesti Pank identified four main reasons for the closure of customers' bank accounts.

In most cases, people close their accounts themselves because they no longer use them or have decided to do their banking elsewhere. Banks may also close accounts, at the customer's request, in cases where they have not used them for over two years and no longer maintain any ties to Estonia.

Most alarming, is when a customer falls foul of a bank's risk profiling procedures, with banks themselves pointing to existing legislation in place to counter terrorism and money laundering.

"Unfortunately, at the moment, in order to prevent money laundering, the legislation allows for a person's bank account to be closed without any explanation," said Soo.

"It is very important for us that our clients do not use the bank for illegal activities, said Raul Vahtra, Swedbank's head of financial security.

"This means, for example, that transferring money, which has been obtained from criminal activities through a bank is definitely a red line. It is not acceptable for us. If someone is attempting to use our bank to get criminal money, then it is clear that the bank does not want to have a relationship with this kind of customer," said Vahtra.

However, complaints received by the Chancellor of Justice showed, that often people are unaware of why their accounts have been closed, with banks failing to provide any explanation. According to the Chancellor of Justice's office, saying that an account was closed under the Money Laundering and Terrorist Financing Prevention Act is not enough.

"Indeed, at the moment, banks are not required to provide valid justifications (for account closures -ed.). Because investigations of this nature have to be at least partly secret, the justifications provided for suspected money laundering may give rise to conspiracy theories. It is therefore not possible to explain directly to someone that they are suspected of money laundering, Soo said.

"However, on the other hand, there should be an explanation of the specific reason behind an account being closed, so that people have the possibility to challenge these kinds of decisions," Soo added.

ETV+ show "Insight" highlighted the case of Andrei, a 27-year-old from Tallinn who has been active in the cryptocurrency business for five years and whose account was closed unexpectedly. Andrei, who had an annual turnover of around €20,000, lost access to his money and was therefore left unable to cover daily expenses or pay his bills.

The wording of the law, which states that, "this account shall be closed in accordance with international measures to prevent money laundering and the financing of terrorism", also makes it practically impossible to challenge in court.

Therefore, Andrei is now appealing to the courts for permission to transfer his money into different banks. According to banking regulations, money from a closed account can only be transferred to one bank, either in Estonia or elsewhere in the European Union.

"The nature of the problem is, that the need to use a bank account is so important to people that it is impossible to carry out their everyday activities without it," said Soo,

"Of course, preventing money laundering is an important objective, however the Chancellor of Justice also has to look at whether basic human rights are being respected. This is a problem that affects a lot of people and for them it is a question of survival," she said.

Due to the high number of people affected by account closures, the Chancellor of Justice's office has proposed one potential solution. However, implementing it would not be a quick process.

"In our opinion, it is possible to create a form of social bank account. This would mean that people could use a certain limited amount (from the account). However, we have to bear in mind that this would certainly be very costly for banks. It will also take time to come to an agreement with the government regarding how this might be implemented," said Soo.

"However, if we still want to comply with the Constitution, we also have to find a balance between fighting against money laundering and upholding people's rights," she said.

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