Lithuania’s central bank has revoked the licence of a local fintech implicated in the Wirecard scandal because of major breaches of anti-money-laundering and counter-terrorist financing rules.
Prosecutors in Munich suspect that UAB Finolita Unio, a fintech registered in Lithuania’s capital Vilnius, was used to steal more than €100m from Wirecard just before the German payments company collapsed, the Financial Times reported last month.
The Bank of Lithuania said Finolita had treated anti-money-laundering and counter-terrorist financing rules “irresponsibly”, failing to assess the risks of its customers as well as negligently checking their identities and beneficial owners.
The Finolita case has given rise to scrutiny of Lithuania which, following the UK’s departure from the EU, has the highest number of fintechs in the bloc. Some politicians in both Lithuania and Germany called Finolita a “wake-up call” for the country over the need to keep up with the fast-moving fintech sector.
Marius Jurgilas, the board member at the Lithuanian central bank responsible for supervision, told the FT on Tuesday that it would be “unfortunate” if there was a perception that “we could be under pressure”.
The Lithuanian central bank contacted local payment companies in June 2020 after the German financial regulator belatedly acknowledged problems at Wirecard, which went bust shortly afterwards.
It identified issues at Finolita, and began a formal investigation in the autumn of 2020. The probe found Finolita failed to comply with rules on international sanctions and “inadequately monitored” operations of people related to the company.
German prosecutors suspect that part of a €100m loan granted by Wirecard in March 2020 to a subsidiary of Finolita’s owner, Singapore-based Senjo Group, and processed by the Lithuanian fintech, was channelled to Wirecard’s now fugitive second-in-command, Jan Marsalek.
Jurgilas said one lesson from Finolita was not to “trust any related parties”. He added that it was “not the first” time the central bank had stripped a fintech of its licence and added: “I can’t claim in the future there won’t be more cases . . . I don’t think it proves or disproves anything. This is the nature of the world. It’s not black or white, it’s shades of grey.”
Finolita said the revocation of its licence was “extremely severe”, especially because it had notified the central bank of the suspicious payments and was in the middle of selling itself to new investors, having already transferred voting rights from Senjo to an independent trustee.
It added that it would appeal against the decision, which it called “bad news for every participant in the financial market” because companies would try “to hide [their] mistakes rather than try to solve a problem openly”.
Source – FT