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Central Europe
May 3, 2019 www.intellinews.com I Page 14
Money-laundering crisis reshapes Estonia’s relations with non- resident businesses
Sergei Kuznetsov in Tallinn
When the Estonian government launched its ambitious e-residency programme in late 2014, little did Tallinn think that the country’s largest- ever money-laundering crisis, with the local unit of Danske Bank at its centre, would make com- panies registered by non-residents undesirable clients for banks operating in the country.
“All countries seek relationships with non- residents, for example to encourage foreign investment, but Estonia is the first country to officially acknowledge that relationship through e-residency,” Adam Rang, head of content at
the e-residency programme, tells bne IntelliNews. “E-residents can then conduct business using an EU company that they can run entirely online from anywhere, with minimal costs and hassle.”
Today, any foreigner may apply for Estonia’s electronic identification document via the country’s diplomatic missions abroad.
After a clearance procedure conducted by the nation’s law enforcement authorities,
one can obtain an ID card that provides access to a set of governmental services that allow one to register a company remotely.
A foreigner pays EUR100 for an ID card, while for an extra EUR500, it is possible to register a company in Estonia with a legal address and a local representative person (the fee includes a one-year contract for the address).
“This kind of location-independent entrepreneurship is considered normal to Estonians, as we’ve been using digital IDs to eliminate bureaucracy and offline hassle since
Estonia's e-residency programme was hurt by the Danske Bank money laundering scandal
2002,” Rang adds. “For people around the world who otherwise face barriers to entrepreneurship, this is a game changer.”
As of late April, there are almost 55,000 e-residents registered in Estonia. One quarter of them are Finns, who traditionally have close commercial, economic and cultural ties with Estonia, with Russians and Ukrainians also numerous. (bne IntelliNews’s parent company is also registered in Estonia.)
According to Rang, when the e-residency programme was launched four and a half years ago, it was immediately popular with people who were already conducting business in Estonia. This is why why there is a large number of e-residents from neighbouring countries Finland and Russia
.
“After that, there was also a notable surge in interest in Ukraine, where Estonia has strong connections,” he adds.
“Ukraine is home to a large population of IT professionals on the edge of the EU market, yet if they register their own company locally then they face a range of complications for conducting cross-border business, including the fact that [the payment system] PayPal isn’t available for Ukrainian companies,” he says. “E-residency enables them to remain in Ukraine, still pay
all their taxes in Ukraine, but operate within the legal framework of the EU with a company that can access services like PayPal.”
Read the full story here