Estonia moves to restore financial watchdog's suspended powers

Estonia's parliament, the Riigikogu, could hold a final vote as early as October on legislation aimed at restoring powers stripped from the Financial Intelligence Unit (FIU) over the past year.

The bill targets two key restrictions: the FIU's access to bank account data through the enforcement register, and its ability to conduct on-site inspections at banks and other regulated institutions. Access through the register was suspended after Chancellor of Justice Ülle Madise questioned its legal basis, prompting Justice and Digital Affairs Minister Liisa Pakosta to halt it. The Tax and Customs Board faced similar restrictions until the government reversed course for that agency in May.

The government now proposes clarifying exactly when and how the FIU and tax authority may request banking data via the register, stressing this does not create new powers but specifies how existing ones can be used through a secure, logged channel. Requests would need justification and documentation, and individuals would be able to challenge authorization decisions.

The dispute has already had practical consequences: LHV Pank has stopped supplying account statements to the FIU, arguing it lacks legal authority to request them, and a Tallinn court sided with the bank, though the FIU is appealing. FIU chief Matis Mäeker said the restrictions are undermining Estonia's ability to cooperate with foreign partners, citing a case where fraudulently obtained funds were rapidly spread across accounts at 14 institutions in different countries, complicating recovery.

A January Supreme Court ruling further limited the FIU, barring it from physically visiting banks or gambling firms to verify compliance with anti-money-laundering rules — something Mäeker called an irreplaceable supervisory tool.

Opposition lawmakers have broadly backed the bill but raised concerns over lengthy notification periods: account holders would typically learn of a records check after five years, with possible extensions to ten years in some cases. LHV has separately warned that retaining personal banking data for so long could conflict with EU privacy rules.

Madise, now the sole registered candidate in Estonia's presidential election, has said she supports the bill's aims but wants lawmakers to reconsider the notification timelines. Should she be elected president in early September, any final version of the bill could reach her desk for signature.