Banks may gain power to freeze suspicious money transfers
Estonia plans to let banks halt transfers they suspect are fraudulent and alert authorities, aiming to slow surging phone and investment fraud.
The Ministry of Finance is submitting a bill to a coordination round next week that would allow banks to freeze payments showing signs of fraud and notify policy, the Information System Authority (RIA) and other banks.
Last year, nearly 3,700 people in Estonia lost more than €29 million to fraud, mostly through scam calls and sham investment platforms.
Under the proposal, a bank could block a transfer even after a customer confirms it with their PIN2 code. If a transaction appears suspicious, the bank could "put a stop" to it, said ministry deputy secretary general Evelyn Liivamägi.
The pause would trigger contact with the customer and create what she described as a breathing space, or moment to reconsider whether they truly intended to transfer that money.
"And if they manage to convince the bank that yes, they are the ones who want to transfer that money, then the transfer would go through," Liivamägi added.
The EU will make freezing suspicious payments mandatory starting in 2028. Estonia's plan, slated to enter into effect July 1, could spark debate with Brussels, though the deputy secretary general said the ministry's initial analysis suggests it does not significantly clash with current EU rules.
"If the European Union thinks we will, then we'll argue it out," she said.
Banks call the change essential, saying it would make fraud prevention far more effective.
Transfers would be halted only in cases where a bank already suspects fraud, said Sandra Holm, head of fraud prevention at the Estonian Banking Association (EPL). She added that privacy safeguards would remain in place, and that banks would "only employ these measures when needed."
Warning signs, Holm explained, include unusually large transfers abroad from customers who have never sent such sums before, or investments in platforms where there is strong reason to believe the money will never be recovered.
Phone scams skyrocketing
Police are also ramping up efforts. A new fraud prevention and investigation center launches in April, with a focus on international cooperation.
Tracing stolen funds means working not only with the country where scam calls originate," but with every country the money passes through," said center chief Jaagup Toompuu.
Though funds move abroad quickly, tracking them is key to targeting the criminal groups behind the schemes, and according to Toompuu, there is "certainly more than one."
Call volumes have risen over the past two years, he explained, and the scale of phone scams is now so large that their profits have eclipsed even those of drug trafficking in the criminal underworld.
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Editor: Mari Peegel, Aili Vahtla
