25/03/2025
Finantsinspektsioon ran a large-scale test in 2024 to assess the ability of the automatic controls of banks, payment institutions and investment firms to identify people and companies on the sanctions list. Finantsinspektsioon found that the results of the test of the filtering systems were generally good. The tests did however discover some systems that needed additional assistance.
“Financial intermediaries have a legal obligation to be sure that money cannot be moved through them by people who are under international financial sanctions. They can only meet this obligation if they have the capacity to identify those people efficiently in their client lists and related transactions. The test run by Finantsinspektsioon gives financial institutions a good opportunity to make their systems more effective if needed in response to the results”, said Andre Nõmm of the Finantsinspektsioon management board.
The test was run jointly with an external provider of technology services. The modern technology used for supervision allowed a very large range and scope of filtering systems to be tested. Tens of thousands of data entries in 38 different filtering systems were tested.
The test results showed that applying good technology is not always enough on its own. It is more effective when experts on financial sanctions work alongside the technology, as they can set the filtering systems up correctly and adjust them to the needs or business model of the individual institution. The same filtering systems provided by a single supplier may produce different results in different institutions.
The tests covered 15 companies, which were 12 banks, two payment institutions and one investment firm. The sanctions lists covered international and Estonian sanctions, including those applied by the UN, the European Union and the USA.