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The Bank of Lithuania has taken further action against mismanagement in the local fintech ecosystem, placing restrictions on e-money firm Foxpay.
The regulator found that the institution's internal systems failed to effectively monitor and stop suspicious transactions, especially among clients involved in virtual asset services.
Furthermore, Foxpay provided inaccurate, incomplete and sometimes contradictory information to the regulator, exacerbating concerns over its internal control processes.
The e-money firm must now submit detailed explanations and remedial plans for the deficiencies identified. Once it does so, the Bank of Lithuania will make a final decision regarding any further measures.
Restrictions in place
The Bank of Lithuania has appointed Grant Thornton as a temporary supervisory representative.
According to the regulator, the temporary representative will not take over the management of Foxpay, and the appointment does not affect clients and their opportunities to use services.
The institution will be able to continue to carry out its activities to the extent that is not limited by the obligations of the Bank of Lithuania.
As part of the new restrictions, it is barred from establishing new business relationships or providing financial services to certain high-risk groups.
These include clients related to Foxpay's shareholder, Ieva Trinkūnaitė, and clients involved in high-risk activities such as forex trading, gambling, IT, marketing and virtual currency services.
Fundamental deficiencies
The decision follows an inspection conducted by the Bank of Lithuania from September 2022 to March 2024, which uncovered fundamental deficiencies in Foxpay’s operations and management.
The inspection revealed non-compliance with licensing requirements, particularly regarding anti-money laundering and counter-terrorist financing (AML/CTF) measures, and serious lapses in the protection and control of customer funds, with unauthorised entities accessing and handling these funds.
Additionally, unauthorised access to Foxpay’s information systems was permitted, compromising operational security and customer data.
A significant point of contention is the involvement of Trinkūnaitė and related parties in Foxpay's activities.
Trinkūnaitė “does not meet the requirements of an impeccable reputation”, according to the regulator, which also suggested that associates of the shareholder were improperly involved in Foxpay’s operations.
This contributed to a persistent risk of conflicts of interest and inadequate management of these risks.
Trinkūnaitė is based in Zug, Switzerland, according to her LinkedIn profile, and owns a Swiss software business called iSun and is vice-president of a Lithuanian non-profit called the Crypto Economy Organisation.
Vixio has contacted a representative of Foxpay for comment.
