(Bloomberg) -- The Bank of Lithuania has revoked the local license of Transactive Systems Ltd., a UK electronic-money firm that processed more than €1 billion ($1.1 billion) of payments every month, detailing a litany of compliance failings.
The central bank, which imposed restrictions on the company earlier this year and begun a review of its operations, said that Transactive “seriously and systematically infringed” anti-money laundering and counter-terrorist financing requirements, according to a statement Thursday. It said the firm’s Lithuanian subsidiary failed to properly identify customers, enabled the opening of anonymous accounts and provided incorrect information.
The watchdog also imposed a fine of €280,000 ($300,000) on Transactive Systems UAB, the company’s local subsidiary.
The Bank of Lithuania and the UK Financial Conduct Authority have handed out hundreds of licenses combined to electronic-money institutions, or EMIs, lightly-regulated financial-technology firms that are allowed to process payments and hold clients funds. The sector has attracted criticism for potentially opening the door to money laundering and other kinds of fraud.
“We are certainly disappointed by Bank of Lithuania’s decision this morning,” Roger Sauerhaft, an external spokesman for Transactive said in an emailed statement, adding that the company had been “working diligently” on a remediation plan to address the regulator’s concerns. “Given that, we were surprised to learn of today’s announcement. We remain committed to our mission of connecting the world with real-time payments and we are assessing next steps for our business within the European Union.”
Transactive received and then kept licenses from both regulators despite one of its founding investors being convicted of an unrelated $1 billion fraud in Florida and one of its senior employees facing separate federal charges in Nevada, Bloomberg reported in February. The firm quietly became one of the biggest players in the sector, often by working with high-risk customers.
Multiple EU regulators and individuals contacted the Bank of Lithuania with complaints of potential fraud tied to Transactive’s clients and accounts, according to the statement.
Transactive’s license from the FCA is still active, according to the regulator’s website. A spokesman for the FCA declined to comment on whether it intended to take any action.
“We look at a wide range of information in our supervision of firms, including action taken by our international counterparts,” the spokesman said.
(Adds Transactive, FCA comments.)
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