The International Monetary Fund (IMF) finds that Estonia's efforts to tackle money-laundering are "sufficient," and has praised the exchange of information between the supervisory authorities in the wider region in the course of their anti-money laundering work, the Bank of Estonia (Eesti Pank) says.
The IMF published earlier in the week a large-scale analysis which it says will contribute to the fight against money laundering both in the Nordic and the Baltic countries.
Bank of Estonia chief Madis Müller said of the development that: "We are grateful to the IMF for this large-scale regional technical assistance project during which the new analysis methods created by the IMF were tested. Estonian state institutions were given recommendations and ideas about how to analyze the financial flows through Estonia better and how to identify risky transactions while this analysis was still being written."
"I hope that the publication of this analysis will also be helpful for the private sector and other countries, as they can learn the best practice from our region", Müller went on.
Member of the Management Board of the Estonian Financial Supervisory Authority Andre Nõmm meanwhile said that: "It is good to see that the analysis approves of the efforts made in Estonia, where high-risk flows of money have been reduced drastically in the financial sector over the years. The IMF's project and the new methods it used are a good example of how we should measure money-laundering risk in payment flows and how we should cooperate on such issues."
Head of the Financial Intelligence Unit (FIU) Matis Mäeker meanwhile said that: "Modern data analysis capacity and especially the use of artificial intelligence show clearly how we as a country can be increasingly precise at mapping the risks of financial crime so that we can minimize them."
"The report gives a clear signal to criminals that Estonia as a country and the region it is in are very good at what we do, and there is no point in testing out our systems because sooner or later any crime will be identified and punished," Mäeker went on.
The IMF has also recommended that the Nordic and Baltic countries could combat money-laundering and terrorist financing (AML/CFT) better by collecting even more cross-border data. and by investing in advanced data analytics tools.
The IMF further recommends that the countries of the region should be prepared to take joint steps to strengthen their respective financial supervision, if, for example, any bank in the region should prove to present an increased money-laundering risk in the future.
The IMF analysis is, the Bank of Estonia says, highly comprehensive and took three years to compile; the Nordic and Baltic countries had appealed to the IMF for technical assistance to carry out the analysis, which was the first regional analysis on AML/CFT issues by that authority.
The IMF analysis focused on financial flows, supervision in the fight against money laundering and terrorist financing, and cross-border risks and financial stability.
The aim of the joint work was to make the framework for tackling money laundering and terrorist financing even more effective throughout the region.
The IMF used various methods to understand the international money laundering risks better, applying machine learning technology at the country level and regional level, analyzing how sensitive the AML/CFT supervisory tools are in responding to risks, and making recommendations for ways to make those tools more effective. It also looked at ways of quantifying the impact of money laundering shocks on financial stability.
The analysis also noted the clear direction that has been taken in the region in consistently strengthening the measures taken to stop money laundering and terrorist financing. Because the risks to financial credibility change all the time, it is important for activities to be coordinated in order to keep pace with those risks, and for innovative solutions to be identified.
The IMF also recommended that international financial flows should be permanently monitored, information on macro trends should be exchanged at the regional level, and the countries whence money laundering risks to the Nordic and Baltic countries could emerge should be identified more precisely, the IMF said.
It also recommended assessing how breaches in financial integrity affect financial stability, so that the financial system can be fortified against shocks caused by money laundering.
The IMF analysis on the fight against money laundering in the Nordic and Baltic countries is available in full here.
Editor: Andrew Whyte
Source: Bank of Estonia