(Bloomberg) --
EPayments Systems Ltd., a UK electronic payments company that’s been under regulatory scrutiny for years over its anti-crime controls, is closing down.
The London-based firm, which deals in prepaid cards and electronic wallets and had almost £180 million ($211 million) in client funds at its peak, has begun the process of entering into an “orderly, solvent wind-down,” according to a statement on its website. The Financial Conduct Authority forced ePayments to freeze operations in early 2020 and the closely held firm had been working to improve its anti-crime controls since then, filings show.
“We can no longer sustain the business to build back to what the FCA require and a ‘business as usual’ state,” according to the statement. It “will now focus entirely on providing customers with refunds” and closing accounts.
The fate of ePayments offers a window into the sometimes dicey world of UK electronic-money institutions, or EMIs, lightly regulated payments firms licensed by the FCA that move about £1.4 billion a day. The industry has come under scrutiny amid fears that weak controls and lack of oversight are enabling the movement of illicit funds.
The company’s listed directors, Elena Arbuzova and Andrei Fetin, didn’t respond to requests for comment. Emails to a generic ePayments address weren’t immediately returned.
It’s unclear who owns ePayments. The company’s shares are held by ePayments Holdings Ltd., a firm in Jersey in the Channel Islands, but the ultimate owners are the trustees of an entity called the EXIF Trust, filings show.
ePayments has a subsidiary in Moscow, and the vast bulk of its revenue has come from outside the UK, according to filings.
Customer funds “remain in safeguarded accounts,” according to the statement. The firm had 255,000 active accounts and oversaw £110 million of client funds at the end of April 2020, according to its most recently published accounts. It’s unclear how much customer cash ePayments still oversees.
The FCA awarded ePayments its most recent EMI license in 2018 only to discover problems with its operations during a review the following year, filings show. The regulator took action in early 2020, restricting the company from onboarding new customers or allowing existing ones to take their money out, according to filings with the UK Companies House.
“Firms need to ensure they comply with our regulatory requirements, such as having effective financial crime controls and protecting customer funds, even when they are winding-up,” said Kai Linscer, a spokesperson for the FCA, who declined to comment specifically on ePayments. “We continue to monitor firms during this process to ensure they meet our regulatory expectations.”
(Adds FCA statement in last paragraph.)
©2022 Bloomberg L.P.
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