April 13, 2024

UK’s Transactive Systems to Cease Operations

Transactive Systems, an electronic-money company in the United Kingdom, is reportedly ceasing operations following the revocation of one of its licenses due to concerns about money laundering.

The company’s CEO, Daniel Edwards, told Bloomberg that Transactive has no plans to continue operating the business after regulators froze client accounts, making it impossible for the company to service clients or generate income, Bloomberg reported Wednesday (Feb. 28).

Initially licensed by the Bank of Lithuania, Transactive had that license revoked to regulators last year, according to the report.

The company will also surrender its license with the U.K.’s Financial Conduct Authority (FCA), the report said.

The FCA’s Financial Services Register showed Wednesday that Transactive “applied to cancel” its permission to issue electronic money and provide payment services on Feb. 9.

At its peak in 2022, the firm was processing over €1 billion (about $1.1 billion) of payments every month, highlighting the rapid growth of lightly regulated electronic-money institutions (EMIs) in Europe, per the Bloomberg report.

However, concerns about fraud and inadequate anti-crime measures within the sector led regulators to reevaluate their oversight of EMIs, according to the report.

A Bloomberg investigation in 2023 found that Transactive had obtained its license despite having a compliance official who faced criminal charges in Nevada and a founding investor who was jailed for healthcare fraud in Florida, the report said.

It was reported in February 2023 that Transactive’s growth had slowed after the Bank of Lithuania imposed limits on it, saying the electronic-money institution could not take on new customers or provide services to finance or cryptocurrency clients until the bank completed a review.

Transactive had said that it focused on serving clients in cryptocurrencies, gambling, foreign exchange (FX) trading and other “compliance-intense industries.”

When announcing that it was imposing limits on the company, the Bank of Lithuania cited Transactive’s local subsidiary’s “serious infringements” of anti-money laundering (AML) laws and “breaches and shortcomings” in controls.

A Transactive spokesperson told Bloomberg at the time that the company was “disappointed by the Bank of Lithuania’s decision, and we are working to quickly resolve issues related to their findings.”

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