Estonia’s e-Residents to be Able to Open Bank Accounts from Abroad

Sander Nõmmik
Author Sander Nõmmik

A bill of amendments has exited the Estonian Interior Ministry that is aimed at simplifying the activities related to e-residency and concluding an agreement with credit institutions; among other things the amendments would enable e-residents to open an Estonian bank account from abroad, news agency BNS reports.

According to the amendments, applicants for e-residency will not have to prove in their future their strong connection with Estonia. Where at present applicants for e-residency must prove either their relationship with the Estonian state or legitimate interest in the use of e-services of the Estonian state, the ministry wants these requirements to be dropped on the grounds that ascertaining the presence of these circumstances requires excessive work and time, whereas most would-be e-residents may not necessarily know exactly about their need for the use of digital ID at the time when they apply for a digital ID.

Abolition of the requirement to have a relationship with Estonia, which will expand the circle of potential applicants for e-residency, will according to the ministry increase of the frequency of the risk of misuse of the e-resident’s digital ID.

Ruth Annus, head of the department for citizenship and migration policy at the ministry, said that in the future also people who have no relationship with Estonia but wish to become an e-resident in good faith can become e-residents of Estonia.

“It makes sense to direct the resource that is now spent on checking a person’s relationship with Estonia to make a background check and ex-post monitoring of individuals,” Annus told BNS.

The duties of gathering applications for e-residency and issuance of e-residency can in the future be placed on persons in private law. Under current law the applicant must turn either to the office of the Estonian Police and Border Guard Board or a mission of Estonia abroad. The new arrangement would be similar to that of gathering biometric data with visa applications, where the Foreign Ministry is entitled to assign these duties to a person in private law that meets valid requirements.

“Also in that case the decision about the issuance of a digital ID or refusing thereof would be made by the Police and Border Guard Board. In which countries that possibility will be made available first depends first and foremost on the foreign and economic policy interests of Estonia. While with the bill the possibility will be created for the involvement of trustworthy service providers, the concrete steps as regards expanding it are still to be decided about,” Annus said.

The fact that a person must come to Estonia physically to open a bank account necessary for engaging in business has been an obstacle to the use of e-services so far. The amendment would allow interested credit institutions to verify the identity of the applicant by means of IT channels. This is provided that four conditions are met – IT means are used for authentication which enable to record and reproduce the process, a document meant for digital identification issued by the Republic of Estonia is used for authentication, the identity of the applicant is verified on the basis of data for identification of the person entered in the identity documents database, and the credit institution observes stepped-up diligence measures.

If credit institutions verify the identity of an applicant indirectly, a stepped-up diligence measure must be applied – the first transaction related to the transaction must be made via a bank account opened to the name of the person or client in a credit institution registered in or whose place of business is in a contracting state of the European Economic Area or a third country where requirements equal to those provided in the Money Laundering and Terrorist Financing Prevention Act apply.