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According to the Bank of Lithuania, the UK-headquartered e-money institution TransferGo has “deficiencies” and an “insufficient” compliance with anti-money laundering (AML) controls.
The Bank of Lithuania has fined the cross-border money transfer firm €310,000 after finding that it violated AML compliance rules.
During an inspection by the regulator, it was found that the institution's procedures for client due diligence were in poor condition.
For example, the risk factors of products, services and operations were not properly identified and assessed.
The procedures applied by TransferGo's Lithuanian subsidiary did not always ensure that the identity of customers, their representatives or beneficiaries was properly determined.
The institution also failed on occasion to collect information about the purpose and expected nature of its clients' business relationships and did not always properly check the information about the clients' beneficiaries.
Further, enhanced customer identification procedures were not properly applied to high-risk customers.
The Bank of Lithuania criticised the firm’s monitoring procedures as “insufficient to properly manage the risk of money laundering and terrorist financing”.
“While monitoring transactions, the institution did not always ensure that the transactions corresponded to its knowledge about the client, its business, the nature of the risk and the source of funds,” the central bank said in a statement translated from Lithuanian.
“In addition, the institution provided reports on suspicious transactions and transactions outside the procedure established by legal acts.”
The regulator also came to the conclusion that the company's internal control system had deficiencies.
This included the maintenance of registration logs, management and communication of compliance information and approval of the internal procedures themselves.
The institution did not appoint a board member responsible for the implementation of measures to prevent money laundering and terrorist financing and a senior employee who would cooperate with Lithuania's Financial Crimes Investigation Service (FNTT) in accordance with the established legal requirements.
The Bank of Lithuania has now told the institution to eliminate all identified violations and deficiencies of legal rules by December 1 at the latest.
According to the regulator, TransferGo's Lithuania office has already submitted a plan for the elimination of deficiencies and indicated that some have already been completed.
In the last year, the Bank of Lithuania has taken an increasingly tough approach to the thriving payments and e-money sector that operates in the country.
In July it revoked the licence of the payments institution LockTrust over what it said were “repeated material violations and failure to comply with mandatory instructions issued by the supervisory authority”.
This approach may be part of a push to be taken more seriously elsewhere in the EU.
For example, one source in Frankfurt recently referred to Lithuania as “the wild East”.
This may be related to the country’s efforts to encourage UK-based payments and e-money firms to get a licence in the country after the UK’s withdrawal from the EU and loss of passporting rights.
However, when speaking to VIXIO last year the regulator said that it was now focused on quality rather than quantity.
