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Prevention of terrorist financing

Islamic extremist terrorist organisations operating in the Syria-Iraq conflict zone have lost a significant part of their sources of income in the area, and are therefore seeking outside funding. Muslim communities and non-profit organisations in Europe are among the sources used for this purpose. Calls for support of jihadists and their families in the conflict areas are mostly circulated through social media and messaging applications. In the hope of anonymity, virtual currency exchange providers are also used to collect support. 50 virtual currency service providers are licensed in Estonia.

In cooperation with the Estonian Financial Intelligence Unit, KAPO has updated risk- and suspicionbased indicators to better identify and report transactions involving suspected financing of terrorism. The financial transactions related to Estonia identified to date have not yet given KAPO grounds for criminal proceedings.

We also need to address the risks of the e-residency programme. There is considerable interest among Estonia’s e-residents in the virtual currency industry, which offers anonymity. E-residency is seen as an opportunity to obtain a Schengen visa and various schemes are used for this purpose. Background checks on applicants in high-risk countries continue to be a problem. KAPO has identified individuals with extremist and terrorist ties among applicants for e-residency. There is no effective judicial, lawenforcement or security cooperation between most of the risk-group countries and Estonia. Failure to take these factors into consideration would damage the image of the e-residency programme, the Estonian economy and the country in general – not to mention the security risks and the threat of criminal activity.