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Majestic Financial “grossly and systematically” violated anti-money laundering and counter-terrorist financing requirements, according to the Bank of Lithuania.
The regulator has revoked the Vilnius-based payments company’s licence, saying it had discovered shortcomings in its internal transaction monitoring and a failure to properly separate its business and compliance functions.
On its website, which does not reference the revocation and provides little information apart from a contact page, Majestic Financial brands itself as offering “the solutions for global payments needs”. The payment institution and its chairman did not respond to requests for comment at the time of publication.
“After assessing all the circumstances, the Bank of Lithuania revoked the licence of the Majestic Financial UAB payment institution. This means that it no longer has the right to provide financial services and must return funds to clients within two months,” said the central bank in a statement on its website.
Majestic's internal monitoring procedures had “significant deficiencies”, the Bank of Lithuania said. It had not implemented scenarios to identify cases of terrorist financing, and its measures to monitor customers for suspected money laundering did not work properly and were inadequate.
Further, the institution had failed to conduct internal investigations into potentially suspicious transactions.
“By not conducting effective monitoring, the institution did not identify suspicious transactions, stop them and report them to the Financial Crimes Investigation Service,” the central bank said.
Separation of functions
Majestic Financial also failed on conflict of interest grounds and did not properly separate business and compliance functions, while also not ensuring the impartiality and independence of the internal audit.
This is because employees who were responsible for the internal audit were directly accountable to the persons acting on behalf of shareholders, who held many positions in the institution, including the evaluation of the internal audit.
Majestic Financial’s client verification procedures meanwhile had serious deficiencies, which prevented it from properly assessing and using information received from clients about the purpose and expected nature of business relationships.
According to the central bank, the institution failed in some cases to properly identify the client or their representatives and did not apply appropriate enhanced client identification measures.
The Bank of Lithuania said that during the audit period, a large part of Majestic’s clients had a high risk of money laundering and terrorist financing.
Meanwhile, irregularities and operational deficiencies were also identified in other areas of the institution's activities, and it had failed to provide correct information about the available funds of payment service users.
