{"id":6591,"date":"2021-09-16T10:39:56","date_gmt":"2021-09-16T10:39:56","guid":{"rendered":"https:\/\/newmoneyreview.com\/?p=6591"},"modified":"2021-10-05T17:16:16","modified_gmt":"2021-10-05T17:16:16","slug":"uk-payment-firms-under-money-laundering-scrutiny","status":"publish","type":"post","link":"https:\/\/newmoneyreview.com\/index.php\/2021\/09\/16\/uk-payment-firms-under-money-laundering-scrutiny\/","title":{"rendered":"UK payment firms under money laundering scrutiny"},"content":{"rendered":"

Last year\u2019s dramatic collapse of German payments firm Wirecard<\/a> was the biggest accounting scandal since the Enron failure, two decades earlier<\/a>.<\/p>\n

But according to Transparency International, a non-governmental organisation fighting against corruption, there may be more trouble ahead in the booming financial technology (fintech) sector.<\/p>\n

Speaking earlier today at the Dark Money conference<\/a>, Ben Cowdock, Transparency International\u2019s UK head of investigations, said that he and his colleagues were focusing on UK-based electronic money institutions (EMIs) and authorised payment institutions (APIs) as a nexus for money laundering.<\/p>\n

EMIs and APIs are financial institutions that are authorised to make electronic payments and, in the case of EMIs, issue electronic money. They are subject to lower capital and supervisory requirements than banks.<\/p>\n

According to Cowdock, the relatively light-touch regulatory regime for EMIs and APIs has attracted less welcome business operators.<\/p>\n

\u201cEMIs and payment services firms are increasingly the go-to for people with high-risk businesses, where they can\u2019t get banked,\u201d he said.<\/p>\n

According to Cowdock, the UK Financial Conduct Authority (FCA) has authorised over 230 of these institutions.<\/p>\n

Transparency International has been researching the sector, Cowdock went on, and believes that some firms bear the hallmarks of suspicious activity.<\/p>\n

\u201cThere are unsuitable owners, you\u2019ve got unsuitable owners running companies and offering services in jurisdictions with high money laundering risk, you\u2019ve got interesting associations with ongoing high-risk firms, whether that\u2019s [company] formation agents setting up shell companies or banks overseas that haven\u2019t got the best money laundering track records,\u201d Cowdock said.<\/p>\n

Transparency International would soon publish its report on the payments and EMI sector, he said.<\/p>\n

Last year Open Democracy, an independent media organisation<\/a>, said that corrupt officials, criminals and tax-avoiding entrepreneurs from the former Soviet Union seeking to launder money had shifted their focus from bank accounts in the Baltic States to payments firms.<\/p>\n

\u201cOur research follows individuals and institutions who were linked with Baltic banks that were fined for enabling\u2014or failing to prevent\u2014industrial-scale money-laundering. We\u2019ve found that some are moving into the British e-money business, complete with a stamp of approval from the FCA,\u201d Open Democracy said.<\/p>\n

\u201cWe have found an open Russian-language internet trade in UK shell companies with EMI accounts, EMI licences and even an anonymous EMI provider on offer for \u00a31 million,\u201d it went on.<\/p>\n

Earlier this year, the FCA warned of further payment firm failures<\/a> and reminded clients of EMIs and payment firms that their money was not protected by government insurance in the case of a firm\u2019s insolvency.<\/p>\n

Sign up here<\/a> for the New Money Review newsletter<\/em><\/p>\n

Click here<\/a> for a full list of episodes of the New Money Review podcast: the future of money in 30 minutes<\/em><\/p>\n

Related content from New Money Review<\/em><\/span><\/p>\n

How safe is e-money?<\/a><\/p>\n

FCA warns of more payment firm failures<\/a><\/p>\n

Let the bad guys in<\/a><\/p>\n

Crypto payment cards may be unsafe\u2014but not in the way you think<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Last year\u2019s dramatic collapse of German payments firm Wirecard was the biggest accounting scandal since the Enron failure, two decades earlier. 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