Chancellor of Justice Ülle Madise has urged the need for court approval for Financial Intelligence Unit (FIU) bank queries.

Madise drew attention last summer to the fact that state authorities can access bank account statements via the enforcement register without having the specific legal grounds. As a result, access by the Tax and Customs Board (MTA) and the FIU to the enforcement register has now been restricted.

The bar association notes that under the bill as drafted by the finance ministry would grant the tax authority uncontrolled access to confidential banking information.

"The draft does set out a legal basis for when the tax authority may make inquiries, but it is very general in wording. As a result, it is very difficult to monitor. As mentioned, individuals themselves are not informed of the inquiries, meaning it is uncheckable," Kristi Pent, sworn attorney and chair of the association's financial law committee, told ERR.

The association says that since access to a person's banking secrecy is viable through the enforcement register, that person can be more fully profiled, given a bank statement is comparable with other documentation monitored during surveillance.

The use of the enforcement register under the bill would, the lawyers note, lag behind the regulation of all other covert surveillance activities in Estonia surveillance activities in Estonia, the association added.

The lawyers have noted to ministry that the strongest safeguard would be for the FIU to get prior permission from a court before requesting account statements, as with obtaining permission for surveillance measures. In their assessment, this would significantly the risks of abuse of unfettered state power and unjustified surveillance. "This is one option; we are not saying it is the only viable solution. The issue is that at present there is absolutely no control – neither prior nor any possibility of subsequent challenge by the individual, because they are not aware of it," Pent went on.

Evelyn Liivamägi, undersecretary at the Ministry of Finance, told ERR that the claim that there are no checks whatsoever have no basis in truth.

"In order for the MTA to be able to request information from a bank, it will need to have initiated tax proceedings. The taxpayer themselves will also be made aware of the initiation of tax proceedings. The Taxation Act says that data must first be requested from the taxpayer. If that does not work, then it is possible to request it from the bank, so it is not un-monitorable," the undersecretary said.

Liivamägi continued that many of the lawyers' concerns relate to banking confidentiality more broadly. That is, who has the right to access banking confidential information and how detailed all of this should be set out in law.

"These are two discrete things: We prepared this bill in response to the Chancellor of Justice's supervision, and in the course of doing so, it emerged that a broader view of banking confidentiality is sought after. We have also started on that, and that is why there are now two different draft bills at different stages. They are related, but they do not have to be done in tandem," Liivamägi said.

The ministry says it plans to prepare a separate draft bill by spring, to address these broader issues.

Lawyers: a patchwork approach in the draft bill may lead to reduced legal clarity

Pent informed the Ministry of Finance that in its current form the bill does not resolve the use of data as covered by banking secrecy outside credit institutions in a systematic and comprehensive way, thereby harming overall legal clarity.

Narrowly specifying the regulation for requesting data for just two authorities – the MTA and the FIU – would, however, bring significantly increased legal risks for those applying the law, such as banks and other requesters of data, she added.

"In the committee's assessment, there is a significant risk that the draft will prove deficient in practice, give rise to unnecessary disputes between banks and data requesters, and that legal practice will ultimately become even more difficult to predict than it is now," Pent wrote.

Last July, FIU chief Matis Mäeker, said that the agency would no longer make inquiries about bank accounts via the enforcement register, communicating with the banks via email instead, which he said was a more time consuming and less effective method of fighting money laundering.

Madise had found that government agencies had been accessing account holders' banking information through the enforcement register without the proper legal basis, with the number of requests reaching into the tens of thousands over the preceding year.

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