Fines, Obligations, Warnings As Bank Of Lithuania Takes More Action

June 16, 2023
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The Bank of Lithuania has fined two e-money institutions, while officially warning another for non-compliance.

The Bank of Lithuania has fined two e-money institutions, while officially warning another for non-compliance.

Nexpay, Wittix and Nuvei have all been publicly censured by the Baltic regulator this week for failing to adhere to rules regarding money laundering and sanctions enforcement.

This follows on from last week when the Bank of Lithuania revoked the licence of the UK-headquartered e-money institution Transactive Systems, determining that it had seriously and systematically infringed anti-money laundering and counter-terrorist financing (AML/CTF) requirements.

Nexpay, a Lithuania-based firm, received the largest fine, of €125,000, and is also obliged by July 30 to have resolved the issues uncovered by the regulator.

According to the Bank of Lithuania, the company failed to comply with money laundering and terrorist finance laws, did not provide “complete and accurate” information to the central bank and failed to comply with established deadlines, which the regulator has said “complicated the inspection process”.

When checking clients with a higher risk of money laundering and terrorist financing, Nexpay also did not take appropriate measures to determine the source of assets and funds related to business relations or a transaction, and failed to apply continuous enhanced monitoring of business relations.

Meanwhile, during part of the audited period, the institution failed to bring in additional means of enhanced customer identification for extremely high-risk customers, such as crypto-asset service providers, and the corresponding measures were not properly implemented in practice.

The institution failed to comply with rules regarding client business relations and transactions during the period that it was audited and the internal procedures and the solutions implemented in practice were found not to be sufficient.

In the course of continuous monitoring of the client's business relationships and operations, the Bank of Lithuania said that the institution failed to ensure that the transactions carried out by the clients corresponded to the information available to it about the client, its activities or the actual source of funds.

Deficiencies and violations were identified in the institution's implementation of customer money laundering and terrorist financing risk assessments, customer identification and periodic information update requirements, as well as the requirements of the institution's internal control system in the field of money laundering and terrorist financing, the Bank of Lithuania said.

It also did not analyse complex and unusually large transactions related to the activity of crypto-assets.

Wittix fined €55,000

Despite issuing a fine, the Bank of Lithuania said that e-money firm Wittix had mostly resolved its issues. However, it requires the firm to test and submit its compliance with international sanctions monitoring, scenario review processes and periodicity to the central bank by July 31.

According to the regulator, the institution violated rules regarding international financial sanctions, restrictive measures, and the prevention of money laundering and terrorist financing.

During the period that the firm was audited, the Bank of Lithuania said that the institution's internal policy and internal control procedures related to the implementation of international sanctions had significant shortcomings.

For example, the institution did not have the means to determine whether the transactions and operations carried out by clients fell under international sanctions and did not perform appropriate operational checks or monitor system control measures.

The institution also did not ensure that the identity of customers, their representatives and beneficiaries, including enhanced verification, was determined in accordance with the requirements set by national legislation.

The data of selected client files, meanwhile, showed that the institution did not correctly identify the client's beneficiary in all cases.

Nuvei spared

Canadian e-money institution Nuvei, meanwhile, was let off with a warning for its non-compliance with sanctions regulations.

Shortcomings included not providing adequate measures to determine whether the transactions and operations carried out by clients fell outside the scope of international restrictive measures.

In addition, the firm’s monitoring system did not ensure proper implementation of international sanctions.

However, having assessed that the institution promptly eliminated the deficiencies during the inspection, and took measures to prevent them from recurring in the future, the central bank instead opted for a warning in this instance.

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