According to several sources, the Lithuanian financial regulator, the Bank of Lithuania, has launched an investigation into UAB Payrnet, a subsidiary of Railsbank, over allegations of money laundering failures.
While this is not something unusual, there is a new factor to consider in the potential impact this may have over the whole “fintech ecosystem”.
The scale of the consequence is something not seen before : when looking at the licence usage, we can see that 50 agents (!) are passeporting the licence and serving their own customers using Payrnet licence.
We can surely understand that Payrnet is trying to minimise the facts but if the conclusions of the investigation were to be positive, that would be the beginning of the fall of the house of cards.
Considering that Payrnet has already stopped accepting new clients, the next steps will probably be advanced scrutiny on outgoing transactions and probably “freeze” or major slow down in operations for all actors using this licence.
Moreover, the same entity also holds a UK licence, where they also have 49 agents. At minimum, the investigation of the Lithuanian Central Bank should trigger the same for the FCA on on the UK entity as its hard to believe that the failure to meet regulatory requirements would be limited to the Lithuanian entity and is probably something more systemic in the Group.
The fall of Railsbank would be a real sensation in the fintech ecosystem since the WireCard fall, especially when considering that one year ago, it was looking at becoming a unicorn (valued at 1 billion US dollars), while several month ago it barely was valued at 250 millions US dollars and its now on the verge of losing much of its value if any of the investigation will lead to the loss of its licence.
This also marks a new era where the regulator should maybe review the model of “agent” and the possibilities to “outsource” your licence, for the sake’s of customer’s protection.
Full list of agents using PayrNet licence in Lithuania :
BigeDirect S.A., BPS CYP LIMITED,Clear Currency Europe Limited,CPS Solutions OÜ,Digital Fiat OU,DLTify UAB,Easy Pay Educa Limited,Ela Expeditions IE Limited,ELYPS SA,Fintech Operations OÜ,FirePay Merchant Services,Foris MT Limited,IFX Payments Europe sp. z o.o.,LinkCy Payment Service Provider UAB,Luxon EU ApS,Metallicus UAB,MF TEL,Oktopay Connect LTD,Opt1mize Technologies Limited,ORO PAY LTD,Oval Money (Europe) Limited,Paygoo AS,PaygooAB,Paymium Financial Services France,PAYSME EUROPE LIMITED,Paywho, UAB,Penrose Digital Ltd,PL Gutscheinsysteme GmbH,Plum Fintech CY Limited,Q-Express Online Oy,Rational Foreign Exchange EU, UAB,Regent EU UAB,Revuto OÜ,RG Financial Ltd,Simpled Card Exploitatie B.V.,SimpledCard GmbH,Sync.Money Lithuania, UAB,To,Streamflow EAD,Sureswipe E.M.I. Plc,The Gift Card Company Ltd.,Trustshare UAB,UAB 'Creditco',UAB 'deVere E-Money',UAB Juni Technology,UAB MIR Lithuania,UAB Wirex,UAB Zeply LT,Wamo Solutions Limited,wyer B.V.,Woli Services Ltd
Full list of agents using PayrNet licence in UK :
A&B General (UK) Ltd,Acquired Limited,BeAccount Ltd,Blockthree Payments Limited,Chipper Technologies (UK) Limited,Cledara Limited,EGALITI LTD,ELA EXPEDITIONS UK LTD,Elyps S.A,FAST PAYE LTD,Finadvant Limited,Flutterwave UK limited,FTFT UK LTD,Gosolo Financial Limited,HI55 Ventures Limited,Incendia Card Solutions Limited,KIXY LTD,MASLIFE LTD,MYTALU LTD,NASH EXCHANGE LTD,Neat Global Limited,Niyah Ltd,Novus World LTD,Nufin GMBH,OKTOPAY UK LIMITED,Opt1mize Technologies Limited,PAYAABLE LTD,Paycaptain Payroll Solutions Limited,Payhawk Financial Services Ltd,Payrow Payment Systems Limited,Payscanner Ltd,Paytriot Ltd,Penrose Digital Limited,Plum Fintech Limited,Pockit Limited,Rational Foreign Exchange Limited,Regent Foreign Exchange Limited,Rewire EU B.V.,ROOTSPACE AI LTD,Sonovate Ltd,Statrys UK Limited,Streamflow EEOOD,Tallymoney Ltd,Trustshare Limited,Wagestream Ltd,Wamo.Io Ltd,XCEL INC Limited,ZAZUU HQ LTD,ZEN DIGITAL PAYMENTS LTD
Sources :
- The Telegraph : https://www.telegraph.co.uk/business/2023/02/16/british-fintech-champion-accused-systematic-failings-anti-terror/
- Bank of Lithuania : https://www.lb.lt/en/sfi-financial-market-participants/uab-payrnet
-Financial Conduct Authority : https://register.fca.org.uk/s/firm?id=001b000003JiNqpAAF