Estonia Cabinet Backs Bill to Shield Banking, Telecommunications

Estonia’s government approved a draft law that may raise costs for telecommunications companies and banks, as the Baltic nation seeks to ensure continuity of service if foreign-controlled data systems are moved elsewhere.

Amendments to an emergency law seek to ensure that vital services will still function if information systems run from other countries “cease to operate or the electronic connections to other countries are interrupted,” according to a statement on the government website today. The measures, due to take effect from 2013, require parliamentary approval.

Estonian banking and telecommunications services are almost wholly controlled by Stockholm and Helsinki-based companies, including Nordea AB (NDA), the biggest Nordic lender, and TeliaSonera AB (TLSN), the largest regional telecommunications operator. Under present law, providers can transfer data systems to home countries without ensuring there are backup systems in Estonia, the Interior Ministry said last month on a government website.

Electronic links to other countries could be disrupted by a “sizable cyberattack,” the ministry said. The former Soviet republic was hit by attacks that disabled the websites of the president, parliament, ministries, banks and newspapers for hours at a time in 2007. Estonia is particularly vulnerable to such attacks as more than 90 percent of bills are paid online and the government provides most services on the Internet.

Additional Costs

“Providers of vital services may face additional costs which will depend on a the specific technical solutions to ensure the service,” the ministry said then.

A plan by Stockholm-based Swedbank AB (SWEDA), which owns Estonia’s biggest lender, to relocate its data center in the country to Sweden by 2015 has raised concern among officials responsible for Estonia’s cyber security, Eesti Paeevaleht reported last November. Swedbank spokesman Mart Siilivask didn’t return two phone calls and an e-mail seeking comment.

The Estonian Banking Association and the Association of Information Technology and Telecommunication sent a letter to the government asking for implementation of the law to be postponed for two years, Paeevaleht reported today.

The amendments would raise the fine for violating the law to 20,000 euros ($26,600) from 6,400 euros.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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