The Bank of Lithuania has terminated the electronic money institution (EMI) license of UAB Payrnet. The bank said the license was revoked due to “serious, systematic and multiple violations of legal act. The company allegedly violated the Law on Electronic Money and Electronic Money Institutions, the Law on the Prevention of Money Laundering and Terrorist Financing, as well as the Law on Payments.
PayrNet Ltd was a part of Railsbank (Railsr) in the UK, which filed for bankruptcy earlier this year. Railsr was then purchased by a consortium led by D Squared Capital.
There have been reports regarding concerns that some issued payment cards will not be redeemable.
The Bank said it will apply to the courts for the initiation of bankruptcy proceedings again UAB Payrnet as well as contact law enforcement.
UAB Payrnet is now restricted in its activity, and clients of the firm may apply to receive a refund.
According to the Bank of Lithuania, the institution did not control how and to whom intermediaries provided the services of the institution, how they performed the money laundering and terrorist financing functions delegated to them and failed to comply with the requirement for training of intermediaries, and audits of their activities.
The Bank of Lithuania said there were a number of other particularly serious violations related to the prevention of money laundering and terrorist financing and the implementation of international sanctions measures.
The Bank of Lithuania said that it found that the liabilities currently held by the institution exceeded its assets, and thus insolvent.
Originally, the Bank of Lithuania restricted the activities of UAB Payrnet in February of 2023, and in March, it appointed a temporary representative for the supervision of the activities of this institution.
Gordon McHarg, Managing Director & Founder of Autorekcomments, shared a comment on the Bank’s actions:
“Payrnet’s failure to safeguard client funds and comply with regulatory requirements, as highlighted by the Bank of Lithuania, serves as a powerful reminder for EMIs to prioritise safeguarding compliance. The Bank of Lithuania’s findings regarding Payrnet’s serious violations of legal acts, including AML and payments laws, are concerning. It is essential for all financial institutions to prioritise their obligations in these areas to maintain industry integrity and protect customers.”
In 2022, UAB Payrnet was said to be the fifth largest EMI in Lithuania as measured by its annual turnover of €7.5 billion. Last year, its unaudited operating income was said to be nearly €6.4 million.