Estonian anti-money laundering software pilot reaps benefits

An anti-money laundering (AML) software pilot project in Estonia has prevented €3m of “dirty money” reaching accounts controlled by criminals.

As reported by Computer Weekly in 2020, banks in the country began working with Estonian tech startup Salv on a project to test a platform to share information about suspicious customers and transactions between banks.

Working within the limitations of bank secrecy and the European Union’s General Data Protection Regulation (GDPR), Swedbank, SEB, Luminor, LHV, Bigbank, Citadele, OP Bank, Coop, TBB, and Inbank all partnered with Salv to create an information and data exchange platform.

In an update, Salv said the platform, known as AML Bridge, has so far prevented up to €3m from reaching criminal-controlled accounts after more than 1,200 “collaborative investigations have been undertaken legally, securely, and efficiently across three different use cases – AML, fraud, and sanctions”.

Salv’s CEO and co-founder Taavi Tamkivi said that the initiative proves that tactical AML data exchange between different finance firms is legally, operationally, and technically possible, adding: “It is taking place today, with live customer information exchanged at this very moment.”

He said that the early phase in Estonia has seen banks prevent financial crime cases in the value of €50-100k per week.

Estonia became a hive of activity around the development of AML technologies, after Danske Bank was found to have transferred more than €200bn of suspicious money through its tiny branch in Estonian capital Tallinn.

Danske Bank’s transaction-focused AML-detection apparatus proved sluggish in identifying account, money transfer divergence issues and anomalies at the branch.

Allan Parik, chairman of the Estonian Banking Association and CEO SEB bank in Estonia, said: “I am very pleased that this project has been launched. It shows not just our community’s theoretical understanding of the need to cooperate to tackle money laundering and terrorist financing, but also the practical steps to make it happen. It is a useful additional solution next to our everyday systems in this field.”

Olavi Lepp, CEO at Swedbank Estonia, said banks know what the problems are and Salv worked out how to solve them, adding: “The AML Bridge tool is not just useful to stop money laundering and terrorist financing, it’s also been useful in fraud prevention.”

According to the United Nations Office on Drugs and Crime, criminals launder an estimated €2tn to €4tn every year, with most of this money going through legitimate banking structures.

Salv, which has a workforce of more than 50 people including former Skype and Wise staff, now plans to roll out AML Bridge to further markets. 

Tamkivi at Salv said that the platform’s capabilities can be applied to prevent financial sanctions being breached. “This is extremely relevant today, as in recent weeks we’ve seen sanctions-related investigations through AML Bridge more than double,” he said. “This shows just how important industry-wide collaboration is – not just to stop fraudsters exploiting the financial system, but also oligarch regimes conducting wars.”