The Estonian FSA was informed of the suspicion that the assets of the fund in question were used illegally from 2018-2023, mainly by Lithuanian and Polish companies that the fund had invested in. This fund was managed by OÜ BaltCap Infrastructure Management, the FSA said in a press release.

Lithuanian and EU investigative authorities have launched criminal proceedings regarding the matter as current information indicates that the illegal activities in question were undertaken principally by Lithuanians and in Lithuania, while EU institutions were among the investors.

OÜ BaltCap Infrastructure Management is an unlicensed small fund manager not subject to financial supervision, the Estonian FSA explained. Licenses for fund management as well as for fund managers issued in Estonia are subject to EU law; a fund manager license is required if the value of assets of the funds managed by a business exceeds a certain limit, and the business is obligated to continuously monitor compliance with this.

The Estonian FSA granted AS BaltCap a license to operate as a fund manager on August 7, 2023. AS BaltCap applied for the license as it considered its funds had reached the threshold at which point they would need to be licensed.

AS BaltCap and OÜ BaltCap Infrastructure Management – the latter of which does not have a license and which is linked to the possible thefts – are two separate companies, the Estonian authority emphasized.

When the FSA issued its license to AS BaltCap, it also directed the company to clean up its organization, and expected to see consistent and major improvement in the organization's risk controls. AS BaltCap informed the Estonian FSA it had identified the illegal use of financial resources that October.

"The Estonian authority understands that BaltCap transactions are the basis for criminal proceedings in Lithuania to identify the guilty parties and compensate any damages that may have been caused," it said.

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