London-based digital payments company ePayments Systems Ltd. has announced that it’s shutting down operations following years of scrutiny by the Financial Conduct Authority (FCA).
ePayments has decided to close the business. All customers are requested to take their funds as soon as possible. Learn more https://t.co/f8sNpPH61S
— ePayments (@myepayments) September 12, 2022
In an accompanying blog post, the company cited the shutdown on the FCA’s regulatory crackdown, which dates back over two years ago, as the reason for its closure.
“In practice, this means that we will not return to full operations and will now focus entirely on providing customers with refunds and working through the process of closing your accounts as we close down the business. Your funds with us remain in safeguarded accounts,” the company wrote.
ePayments called on its clients with funds in their digital wallets to withdraw. Those who are currently not open to refunds are required to supply the necessary information.
Before 2020, ePayments was one of the U.K.’s biggest digital payments processors, boasting over a million active accounts. Just two years prior, in 2018, the FCA had issued an electronic-money institution (EMI) license to the company, opening up the $2.7 trillion British economy to the firm. It was popular with digital asset fans for its ‘crypto-to-fiat’ transfers.
However, in early 2020, the FCA turned around and flagged the company for “weaknesses in its financial controls.”
“We have over this period been working hard to ensure these are up to the required standard, but in these extremely challenging and unprecedented global economic conditions, and with the business being restricted for such an extended period we can no longer sustain the business to build back to what the FCA require and a ‘business as usual’ state,” ePayments says in its latest announcement.
The FCA has stuck to its decision and reiterated that all financial companies in the U.K. must abide by the country’s rules.
“Firms need to ensure they comply with our regulatory requirements, such as having effective financial crime controls and protecting customer funds, even when they are winding-up. We continue to monitor firms during this process to ensure they meet our regulatory expectations,” Kai Linscer, a spokesperson for the regulator, commented.
The FCA has been tough on EMIs as the sector has blown up in recent years. Data shows that EMIs process about $1.6 billion a day. Despite this growing significance, they are still only lightly regulated.
The FCA is just as tough on the bigger EMIs as it is with the likes of ePayments. In the past year, it has been embroiled in a dispute with Revolut, a $33 billion fintech startup, over the watchdog’s hesitation to issue the startup with a banking license. This dispute boiled over recently, with the Revolut founder Nikolay Storonsky publicly calling out the FCA for lagging behind its international counterparts.
Revolut is also still awaiting approval by the FCA to fully offer digital asset services in the U.K.
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