ePayments to cease operations after anti-crime controls probe

ePayments, a company which deals in prepaid cards and electronic wallets and had almost GBP 180 million (USD 211 million) in client funds at its peak, has begun the process of entering an ‘orderly, solvent wind-down,’ according to a statement on its website. The Financial Conduct Authority forced ePayments to freeze operations in early 2020 and the closely held firm had been working to improve its anti-crime controls since then, filings show.

Company officials stated that they can no longer sustain the business to build back to what the FCA require and a ‘business as usual’ state. They ‘will now focus entirely on providing customers with refunds’ and closing accounts.

The shady world of UK-based EMIs

The fate of ePayments offers a window into the sometimes dicey world of UK electronic-money institutions, or EMIs, lightly regulated payments firms licensed by the FCA that move about GBP 1.4 billion a day. The industry has come under scrutiny amid fears that weak controls and lack of oversight are enabling the movement of illicit funds.

According to bloomberg.com, it’s unclear who owns ePayments. The company’s shares are held by ePayments Holdings, a firm in Jersey in the Channel Islands, but the ultimate owners are the trustees of an entity called the EXIF Trust, filings show. ePayments has a subsidiary in Moscow, and the vast bulk of its revenue has come from outside the UK, according to filings.

What happens with the customers’ accounts?

Customer funds ‘remain in safeguarded accounts,’ according to the company’s statement. It had 255,000 active accounts and oversaw GBP 110 million of client funds at the end of April 2020, as per its most recently published accounts. It’s unclear how much customer cash ePayments still oversees.

The FCA awarded ePayments its most recent EMI license in 2018 only to discover problems with its operations during a review the following year. The regulator acted in early 2020, restricting the company from onboarding new customers or allowing existing ones to take their money out.

Firms need to ensure they comply with FCA’s regulatory requirements, such as having effective financial crime controls and protecting customer funds, even when they are winding-up. The regulator continues to monitor firms during this process to ensure they meet expectations.