Having nine financial institutions under regulation under your direction? Really? Indeed! It is well known that nominate directors are used by cybercrime organizations and their schemes. They are required to obtain permits and bank accounts, and occasionally they want to hide behind them. It appears that Igor Torsin, who is listed in our records as a director of nine Estonian cryptocurrency companies, falls under the latter category. All nine are cryptocurrency payment processors with FIU licences; some even assist and participate in schemes.
It appears that Igor Torsin, 62, serves as a nominated shareholder or director for these nine crypto payment processors with FIU licences. As a director, he is responsible for compliance with laws and regulations even if he might not be involved in the day-to-day activities of the nine firms. He bears some of the blame for his involvement in scams. The list of his firms is as follows:
As expected, the following legal address unites all of the licensed cryptocurrency payment processors on the above list: Harju maakond, Tallinn, Lasnamäe linnaosa, Väike-Paala tn 2, 11415. Other FIU-licensed businesses like Lipan Services OÜ d/b/a BitTheBank and Vulture OÜ d/b/a Cratos, which we identified as facilitators of scams, also use the same address.
It is probably reasonable to presume that Igor Torsin has beneficial owners who are not Estonians. The identity of these individuals ought to be of interest to the Estonian FIU. The fact that one individual simultaneously serves as a director of nine regulated financial services companies should likewise be of interest to the FIU. That shouldn’t have been feasible to begin with.
STORIES FROM THE CRYPTO: HOW MONEY LAUNDERING TOOK THE BALTIC STATES AS ITS HUB
Over a billion euros have been laundered or stolen from victims in Estonia as a result of financial crime, thanks to the country’s inadequate regulation of cryptocurrencies. The same actors are now moving to new nations and making the same mistakes over and over again.
- In the past five years, Estonia has emerged as a major hub for cryptocurrency businesses; by the middle of 2021, about half of all global virtual currency service providers had their registrations in Estonia.
- These businesses, many of which have non-resident owners and clientele, have been able to market themselves as EU-licensed financial services thanks to Estonia’s lax crypto licensing regulations.
- After analysing over 300 cryptocurrency businesses, VSquare and associates found scores of instances of severe fraud, money laundering, evading sanctions, and financing criminal enterprises and paramilitary groups covertly.
- VSquare and partners discovered numerous instances in which the managers and anti-money laundering (AML) officers of cryptocurrency firms were blatantly unfit for their jobs, ill-prepared for the work, and facing severe financial difficulties: dozens of crypto firms were run by taxi drivers, welders, and social welfare recipients.
- Many of the enterprises left Estonia for other European nations, including Lithuania, when the government started to tighten regulations and revoke licences. This demonstrates how changing the system in one nation doesn’t actually affect anything.
“Usually I was just a shell; I didn’t work with the transactions. I didn’t know what kind of millions went through there,” says Sergei Bezrodny, an unemployed plumber from the Estonian town of Tartu. His public LinkedIn profile claims he has almost 20 years of experience in finance and banking, but Bezrodny is surprised to learn about it and says it is a “mistake”.
Nevertheless, Bezrodny has held directorships in 24 global bitcoin companies in the past.
Really, I don’t want to discuss it. I had enough issues with that back then, and it was a long time ago,” he recalls.
His career in Estonian finance was cut short when banks began to cancel his accounts due to concerns about money laundering, and he currently declares himself jobless.
“I had to establish all of my accounts in Lithuania,” the jobless plumber says.
“I just sit at home now.”
Massive sums of money laundering across the European Union have resulted from the “virtual assets” licence system that was implemented in 2017 and that the Estonian state marketed to the world as groundbreaking and inventive. However, the system quickly spread like wildfire, with shady businesses operating in the jurisdiction.
International con artists exploited the phrase “licensed in the EU” as a marketing tool, using the jurisdiction to instil confidence in their illicit ventures. As a result, 1644 bitcoin businesses with licences have been operating in Estonia for the past six years, or one for every 800 citizens.
Just three Estonian business creation agencies are connected to 40% of those.Two of them gave the businesses “AML (anti-money laundering) compliance officers.” VSquare and its affiliates, including Delfi (Estonia), Siena (Lithuania), Fronstory.pl (Poland), Paper Trail Media, Der Spiegel, ZDF (Germany), and Der Standard (Austria), have demonstrated that a large number of the “specialists” employed by these cryptocurrency companies were insolvent individuals looking for a quick pay period rather than having any experience with money laundering compliance.
We found that a welder barred from conducting business, a homeless individual, a taxi driver in severe debt, and an unemployed plumber were all connected to over 60 cryptocurrency companies as official directors or AML officers.
Even though more than 1500 cryptocurrency businesses have had their licences revoked since Estonia began to amend its outdated laws, this hasn’t meant that the owners have ceased operations. Numerous them relocated to other European countries, such as Lithuania, which is currently home to more than 800 virtual asset businesses.
The majority of Estonia’s crypto businesses are owned by Russians and Ukrainians.
The number next to each nation denotes the national owners and board members connected to Estonian-founded cryptocurrency businesses.
Estonia then started a significant reform to purge the system. As of this writing, just 78 approved cryptocurrency companies remain out of 1644, as the majority of the companies refused to comply with the new laws or were unable to do so.
Matis Mäeker, the head of the Estonian Federal Investigation Agency, affirms that the US sanctions rulings demonstrate how these corporations assisted in funding North Korean nuclear programs as well as Russian mercenary groups.
However, there is nothing that connects them to Estonia; all that exists is that the service providers set up their address, gave some arbitrary nominal directors and AML contact [people] that they found on the street who have no idea what they are talking about. According to Mäeker, they have no idea which companies they are directors of.
“We have no control over them while they are laundering money. They’re not even present in the sense of crime or monitoring. They only exist on paper.
Money Laundering: What Is It?
The illicit practice of disguising substantial sums of money obtained through criminal activity—such as the support of terrorism or drug trafficking—as coming from a lawful source is known as money laundering. Since the proceeds of illicit activities are seen as dirty money, they are “laundered” to appear clean.
Both street-level and white-collar criminals use money laundering, a major financial crime.
Anti-money-laundering (AML) rules are in place at the majority of financial institutions today to identify and stop this kind of conduct.
- The unlawful practice of disguising “dirty” money as lawful rather than obtained through deception is known as money laundering.
- A plethora of money-laundering tactics are employed by criminals to present monies earned unlawfully as clean.
- Cryptocurrencies and online banking have made it simpler for criminals to send and receive money covertly.
- Targeting the financing of terrorism is currently part of the global effort to combat money laundering.
- Additionally, the financial sector has stringent anti-money laundering (AML) policies in effect.
Why Is Fighting Money Laundering Important?
The goal of anti-money laundering (AML) is to strip criminals of the proceeds from their illicit ventures, thus taking away their primary incentive to do such heinous acts. Millions of individuals worldwide are put in danger by dangerous and illegal activities like drug trafficking, people smuggling, financing terrorism, smuggling, extortion, and fraud. These activities also have a significant negative social and economic impact on society. Since money laundering legitimises the proceeds of these kinds of actions, fighting money laundering may significantly help society by lowering criminal behaviour.
Igor Torsin: Conclusion
Convertible virtual currencies (CVCs) are another name for cryptocurrencies, and the U.S. Financial Crimes Enforcement Network (FinCEN) reported in a June 2021 report that they had become the preferred form of payment for a variety of unlawful online activities.
In addition to becoming the primary method of payment for purchasing drugs, online exploitative content, ransomware tools and services, and other illicit commodities, CVCs are being used more frequently to conceal the source of money obtained through unlawful behaviour and to layer transactions. Money-laundering strategies utilising cryptocurrencies are employed by criminals, such as the use of “mixers” and “tumblers,” which disrupt the link between an address (or cryptocurrency “wallet”) sending cryptocurrency and the address receiving it.