Luminor to close down bank accounts of e-residents ignoring due diligence

Luminor notified its clients that as of 1 January, the bank will be closing the accounts of Estonian e-residents that fail to fulfil due diligence.

Hannes Oja, head of Anti-Money Laundering at Luminor Estonia, said that based on the Money Laundering and Terrorist Financing Prevention Act, banks are required to update the data of all of their customers, writes daily Eesti Päevaleht (EPL).

As a result, all existing clients have to do so themselves on a regular basis. Non-resident clients, however, have to answer additional questions regarding their business activity and the origin of their transactions.

"We always remind clients via various channels (email, mail, phone, online bank) to update their information," Oja explained. "If a client nonetheless consistently fails to update their information or is unable to substantiate the origin of transactions and movement of money tied to their business activity, then we are obligated to end the customer relationship. This is in accordance with the Money Laundering and Terrorist Financing Prevention Act."

He also noted that in offering its services, Luminor is focused first and foremost on the local, Baltic market, which is why the bank expects its clients' activity to be tied to the local economic space. As e-residency is not equivalent to Estonian citizenship and all e-residents have to undergo checks, the bank is unable to offer the requested services if it is not provided with sufficient information from its clients.

Luminor spokesperson Hedwig Meidra told ERR that this is a routine process of customer data renewal on the basis of various regulations regarding the prevention of money laundering and the financing of terrorism.

"Luminor has likewise reviewed its risk policy, and only the accounts of those clients will be closed whose risk profile no longer matches Luminor's risk policy," Meidra explained. "A notice regarding this will be sent to the client in accordance with the bank's general conditions, and clients will be granted a two-month transition period so that they can conveniently transfer their accounts."

Arnaud Castaignet, head of public relations for the e-Residency programme, admitted that as banks have become stricter in implementing their know-your-client policies, those non-residents who have no demonstrable ties to Estonia have for some time already faced difficulties in opening and holding accounts with banks located in Estonia, which is why many e-residents opt instead to open accounts with foreign payment institutions such as Holvi and Transferwise.

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