Bank of Lithuania
2020-04-22
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The Board of the Bank of Lithuania has revoked the payment institution licence held by Bruc Bond, UAB (formerly UAB Moneta International). Such a decision has been taken in view of non-compliance with the requirements pertaining to its existing licence and serious infringements of legislation regulating the prevention of money laundering (ML) and terrorist financing (TF), as well as inadequate safeguarding of customer funds and the provision of incorrect information to the Bank of Lithuania in its supervisory reports. The institution can no longer provide payment services and must return the funds received to its customers.

“In response to the detected serious and systematic breaches of national legal acts, we have adopted the most severe enforcement measure in the Bank of Lithuania’s arsenal. Due to maladministration, the services provided by the institution exceeded the limits of its licence, the barrier to potential ML/TF risks was insufficient, while the necessary measures for safeguarding customer funds were lacking. With this resolution we send a clear message to market participants and consumers that unwarranted actions taken by payment institutions will not be tolerated,” said Marius Jurgilas, Member of the Board of the Bank of Lithuania.

The results of an investigation conducted by the Supervision Service of the Bank of Lithuania into the actions of Bruc Bond, UAB showed that the institution held customer funds for a longer period than allowed under the issued licence. In this way, the institution issued electronic money, although it is prohibited to do so without a licence authorising electronic money issuance.

The institution has also breached the requirements set for payment institutions with regard to the protection of customer funds: the institution has long held most of its customer funds with credit institutions, with no precise procedures for safeguarding the funds of payment service users. It was found that the funds of the institution were not kept separate from those of its customers, although this had to be done for security reasons.

During the investigation it was established that for more than a year the institution had been providing incorrect information in its supervisory reports to the Bank of Lithuania regarding its own and customer balances. Such non-compliance not only points to weaknesses in the institution’s internal control mechanisms and risk management, but also risks undermining the essential interests of the institution’s customers, as the Bank of Lithuania is not in a position to ensure proper supervision of the institution without obtaining accurate financial data.

A targeted AML/CTF-related inspection at Bruc Bond, UAB carried out by the Supervision Service of the Bank of Lithuania identified serious and systematic breaches of the Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing with respect to the assessment of ML/TF risks, identification and verification of the customer and the customer’s representative, implementation of international financial sanctions, and adequate staff awareness of AML/CTF requirements. The inspection also revealed that the tools used by the institution to monitor its customers’ business relationships and transactions were formal, ineffective and insufficient to ensure timely identification of suspicious customer transactions and/or activities; the institution also failed to manage the risk of (potentially) being exposed to ML/TF risks.

In light of the above, the Board of the Bank of Lithuania revoked the licence of the payment institution Bruc Bond, UAB. This means that the institution no longer has the right to provide payment services, except where settlement with existing customers is necessary. It must inform customers publicly and in detail about the revocation of its licence and announce how it will return the funds to customers. Until full settlement, the institution will be required to inform the Bank of Lithuania of the progress of the repayment to customers at a specified frequency.

The licence of the payment institution Bruc Bond, UAB was issued on 13 October 2016.