Regulator suspends electronic payment company

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Latvia's financial regulator, the Financial and Capital Markets Commission (FKTK) has suspended the operations of a digital payments company after finding it to be in breach of anti-money-laundering regulations. 

In a statement, FKTK said it had suspended the activities of AlfaPay payment services after finding "significant shortcomings and deficiencies in its money laundering prevention and internal control systems, as well as violations of regulatory stipulations."

AlfaPay's operation was identified as being in breach of money laundering and terrorism financing prevention rules, so FKTK said it had no option but to act.

From July 12 AlfaPay will not be able to accept any third party payments "until the defects are rectified" FKTK said, though it could make payments owed to its customers.

However, AlfaPay's website currently makes no mention of the restrictions - indeed it emphasises its role as a provider of 'escrow' type accounts used to temporarily hold money during transactions of a delicate nature such as property purchase, when the parties involved need reassurance that their money will not be transferred until the transaction is made.

"We are a new financial market participant that offers special escrow account services... requiring a certain amount of trust between the parties involved," AlfaPay's site says.

AlfaPay was registered with FKTK in March 2014 and accoring to the central business register was founded a year before that. The entry also suggests it had particular interest in transactions involving the fuel, chemical and metal industries.

The public face of AlfaPay on its website is board member Anrijs Ceksters, who told LSM the FKTK decision had actually been agreed in advance and that in fact the company had already suspended its own activities in November last year.

"We submitted our own decision to stop activities for a six month period [to FKTK] a couple of months ago," Ceksters said.

Effectively the company is taking a time out while it considers whether it is worth continuing in business, he explained.

"The decision with the regulator was agreed with the company in advance... the [legal] requirements have become more strict and need improved internal processes. We really didn't have big client activity so we decided to take a pause a decide what we are going to do in the future." 

Ceksters said the fact that the company was not actually trading at the moment would soon be added to its website.

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