Bank of Lithuania revokes EMI licence of PayrNet
The Bank of Lithuania has revoked the electronic money institution (EMI) licence of UAB PayrNet, the former subsidiary of UK fintech Railsr.
Bank of Lithuania revokes EMI licence of PayrNet
Following an inspection period, the central bank says it made the decision due to “serious, systematic and multiple violations of legal acts” by the firm and claims the company is insolvent. It says it intends to apply in court to initiate bankruptcy proceedings against the firm, and apply to law enforcement authorities to assess whether criminal offences were committed.
Reports of the investigation by the Bank of Lithuania first emerged in February, with the central bank restricting activities of the payments firm over alleged anti-money laundering (AML) and terrorist financing failings. In March, its parent company Railsr was sold to a consortium of venture capital firms.
With the licence (initially received in 2020) now revoked, the central bank says PayrNet can no longer provide financial services and has to return all funds to its clients within a set time limit.
The Bank of Lithuania alleges that PayrNet violated the Republic of Lithuania Law on Electronic Money and Electronic Money Institutions, the Law on the Prevention of Money Laundering and Terrorist Financing and the Law on Payments.
The central bank says: “During the inspection period, the institution provided financial services through 90 intermediaries, distributors or other legal entities distributing the institution’s financial services.
“In most cases, the institution would establish a business relationship with them without due diligence and without assessing their suitability, reputation and risk; in cases where the assessment was conducted, it was inadequate.”
It also claims that PayrNet failed to store relevant information that could be recovered when necessary, and that its IT systems “did not ensure proper collection, processing and use of data”.
The central bank further alleges that PayrNet did not always report suspicious transactions to the Financial Crime Investigation Service and failed to monitor client payment transactions using “inefficient” tools.
