Why was ePayments Operations Suspended by the FCA?

The surprise news from the payments provider has sent shockwaves through the industry.

This week delivered some big news for the payments space, with ePayments Systems Ltd announcing on its website that it has suspended all activity on its customer accounts following a review by the Financial Conduct Authority (FCA).

In the announcement from the electronic money institution, the company said that its operations had been suspended due to weaknesses in its anti-money laundering systems and controls, which “required remediation.”

The British regulator has recently updated the Financial Services Register, placing the following requirements on the company:

  • Institution to refrain from AIS or PIS for an indefinite period
  • Epayments Systems Ltd must inform customers
  • Epayments Systems Ltd must not register nor on-board new customers
  • Epayments Systems Ltd must not conduct business with corporate, individuals and/or freelancer customers

Aside from updating the register, the FCA was not willing to comment further on the matter.

Theories from market participants

Since the announcement yesterday, many industry participants have been quick to speculate what might be the real reason behind the ePayments suspension. It is worth noting that at this stage, it is pure speculation only, and Finance Magnates is not publishing anything that can be regarded as fact on this matter.

One theory being discussed is that because the money institution is a large payments processor for “high-risk” industries, such as cryptocurrencies, foreign exchange (forex), porn, and more, which traditional banks usually shy away from, there simply is ‘more heat’ on them than other companies in similar fields.

Another possible theory that has been circulated is ePayments’ connection to a crypto exchange called Digital Securities Exchange (DSX). This was at a time (2014) when cryptocurrency was not regulated as heavily in the UK as it is at present. Coindesk reported that the relationship between DSX and ePayments Systems was complicated by a third company, Electronic Payments Association Ltd. Customers funds were routed through the EPA, also a Rymanov company, that worked in partnership with an e-money issuer in Gibraltar.

Although no wrongdoing has been suggested or implied, as Finance Magnates reported, with the UK thrashing its crypto regulation into shape, some crypto providers have had to cease operations while the consequences upon related partners will likely be wide-reaching.

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Other participants have speculated that the suspension might be due to as yet unknown issues with client funds, or banks pushing the British regulator to crack down on payment providers and challenger banks.

Finance Magnates has reached out to ePayments for further information, but at the time of publishing, we have not yet received a response.

ePayments statement to clients

In an email to its customers, the electronic money institution said: “We write to inform you that in accordance with paragraph 12.1 (j) of our standard terms and conditions, we have unfortunately taken the hard decision to suspend activity on customer accounts, effective from today. During the course of this suspension, customers will be unable to transfer, deal, withdraw or deposit funds and will be unable to use their ePayments cards.

“Following a review by the Financial Conduct Authority (‘FCA’) of ePayments Systems Limited’s (‘ePayments’) anti-money laundering systems and controls, a number of weaknesses have been identified which require urgent remediation to ensure that our customers can enjoy a safe and secure platform.

“Following discussions with the FCA, ePayments has agreed to suspend activity on customer accounts until remedial action has been undertaken to the satisfaction of the FCA.

“We know this will be a very frustrating time for our customers. We apologise for any inconvenience caused and are working tirelessly with the FCA to ensure improvements are made and accounts can be reactivated as soon as possible.”

“During this improvement process, we want to assure customers that their funds are being safeguarded as normal.

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