Individuals involved in terrorist activities including those with links to groups such as Al-Qaeda, Daesh, Hezbollah, the Taliban and the Muslim Brotherhood have become increasingly interested in Estonia's e-residency program, the Internal Security Service (ISS) reports.
The ISS, also known by its Estonian acronym Kapo, released its latest yearbook Wednesday, which among many other things reported that 26 people associated with Islamic terror organizations or extremist groups have either applied for e-residency or have actually been granted it.
The yearbook states that terrorist extremists' motives for ostensibly using the national e-residency program as a means of doing business is to conceal their economic activity from authorities in the states in which they are resident.
A telltale sign is obtaining e-residency and setting up an Estonian-registered company, but then not immediately doing business via these means.
Setting up a company may also help in obtaining a Schengen Area visa, the ISS says.
The ISS also says that the not-for-profit sector carries risk, due to a lack of awareness on preventing terror financing, and the lack of the requisite legal framework.
At the end of 2021, there were 23,362 non-profit organizations (MTÜ) and 818 foundations (SA) registered in Estonia, with 56 of this total being assessed at high risk, in terms of potential use for terror financing.
At the same time, the ISS notes that there is no evidence the sector has actually been used in terror funding, though financial transactions related to an extremist Islamist movement have been identified, via the aid of the Money Laundering Data Bureau, the ISS says.
This risk is heightened if there is a lack of a cooperative legal framework between Estonia and the country in question.
"This case demonstrates the dangers of e-residency in relations with those countries with which Estonia has no legal cooperation," the ISS notes.
Obtaining e-residency is a relatively quick and simple process, the ISS reports – indeed that is one of its main selling points – even in the case of applicants from countries with no cooperation with Estonia at legal or law enforcement level.
The ISS puts the time-frame for receiving e-residency at one-to-two months in this case, with no physical presence required and background checks relating to that available on public sources with regard to the applicant.
However, revoking e-residency is potentially a much more time-consuming matter if, for instance, the individual resorts to a court action.
In this case the process can last years, the ISS adds.
Terrorist organizations, their supporters and other extremists will continue to be interested in anonymous electronic money transfer services and the ability to make transactions that do not require a physical presence, the ISS notes.
At the same time, the ISS says, the e-residency program is one good means of checking how capable an EU member state (ie. Estonia) is in identifying potential security threats.
The e-residency program was created at the end of 2014 with the aim of providing foreign citizens with secure access to the e-services provided by the Estonian state, promoting foreign business in Estonia and increasing the state's revenue base.
Over 100,000 people from 176 countries have become Estonian e-residents since that time, while last year's tax take from e-residents stood at €48.4 million.
In the time it has been operational, the e-residency program has provided around €157 million to state coffers.
Editor: Urmet Kook, Andrew Whyte