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This time, the target is payment-service providers, which as well as facilitating e-commerce often help people send money around the world at low costs. The risk is that criminals use them to conceal illicit transactions while scrutiny is focused on traditional banks.
The danger was flagged earlier this year by officials from the Nordic countries, which have been at the heart of developments after Danske Bank A/S admitted that much of about $230 billion that flowed through its tiny branch in Estonia may have been illicit.
There’s also been concern about big global players like London-based Revolut Ltd, which has a European banking license from Lithuania.
But it’s law enforcement and regulators in Tallinn, Riga and Vilnius -- a hub for fintech companies -- who’ve taken the most drastic action.
Estonian police this month detained three employees of GFC Good Finance Company AS over money laundering and embezzlement.
GFC, which had been operating since 2013 and controlled more than half of the 183 million-euro ($200 million) market in the first quarter of this year, had its license withdrawn in May. The authorities said it had “seriously breached” rules including know-your-client procedures.
In April, AS Talveaed -- which had serviced higher-risk non-resident clients since 2011 -- was also stripped of its license following “several years” of it violating legal obligations.
“We can confirm that after dealing with those cases, the risk in that sector has significantly declined,” financial watchdog head Kilvar Kessler said by email.
In Lithuania, the central bank fined payment company MisterTango UAB 245,000 euros ($270,000) in October for breaching anti-money laundering and counter-terrorist financing rules -- the company’s third breach since 2016.
The bank has also toughened AML and capital requirements on electronic money and payment companies.
Full article on Bloomberg (subscription required)