Inflow of cash from Russia to Baltics decreased significantly

Inflow of cash from Russia to Baltics decreased significantly. Photo: Liis Treimann

A study conducted by the Financial Intelligence Units of Estonia, Latvia and Lithuania found that travel restrictions associated with the COVID-19 pandemic and the start of a full-scale war between Russia and Ukraine in 2022 significantly reduced the inflow of cash from Russia to the Baltic countries.

At the same time, there is a significant flow of cash from all three Baltic countries across the external borders of the European Union. In the case of Estonia, to the UK. In Lithuania, cash volumes have also been affected by the rapid growth of the fintech sector, the Estonian Financial Intelligence Unit said in a press release on Thursday.

Toomas Plaado, deputy head of the Estonian FIU, said the findings of the international survey are consistent with the FIU's survey of cash related risks of June this year, which looked at the situation in Estonia in more detail.

«Money laundering and related crimes are a cross-border phenomenon, in the fight against which cooperation with other countries is increasingly important, one part of which is joint research of this kind,» he said.

Plaado noted that there is a trend of Estonian individuals and legal entities using Lithuanian payment intermediary accounts for cash transactions. This is partly probably to hide income.

Trends in the cash movement indicate that the Baltic countries are primarily used for cash transit, but the use of cash to launder the proceeds of the shadow economy and other proceeds of crime is also a problem.

The study's recommendations for reducing the risk of cash-based money laundering are about raising awareness and harmonizing legislation. Follow-up studies would help to create a consistent understanding of trends in the illicit use of cash. Cooperation and exchange of data between FIUs, investigating authorities and other partner bodies play an important role in this.

It is also important to continue harmonizing anti-money laundering regulations, which will help reduce the risk of criminals taking advantage of countries and sectors with weaker regulations.

The strategic study on legal and illegal cash flows in the Baltic states is the first collaborative project between the Estonian, Latvian and Lithuanian FIUs on the risks related to illegal cash in the Baltic countries.

The survey shows that the risks and vulnerabilities related to cash have changed in the Baltics between 2019 and 2022. While the numbers of digital payments are on the rise, cash continues to play an important role in global crime, including money laundering, due to anonymity in the execution of payments.