Contis hit with €840,000 fine by Bank of Lithuania
Contis, part of the German Banking-as-a-Service (BaaS) fintech Solaris, has been handed an €840,000 fine from the Bank of Lithuania, with the central bank saying that the firm “did not comply with the requirements for the prevention of money laundering and terrorist financing, as well as information security and business continuity risk management”.
According to a press release by the Bank of Lithuania this week (translated to English from Lithuanian), over a period between 2021 and 2022, Contis, “performing its activities through distributors of electronic money”, delegated to these distributors “functions related to the implementation of money laundering and terrorist financing prevention measures, but did not control that the distributors properly implemented these functions”.
The central bank says the company failed to verify, assess and audit its distributors’ activities or their business models effectively, stating that its procedures had “significant weaknesses”.
The fine also extends to how Contis identified the money laundering and terrorist financing risks of its customers, with its grouping process for this being described as “deficient”.
Even when deficiencies were identified, the Bank of Lithuania alleges that Contis “did not take timely measures to ensure that the distributor properly eliminated them”.
“The implemented scenarios were not enough to identify unusual (suspicious) activities of the client in a timely manner, and not enough human resources were allocated to carry out monitoring,” the central bank says.
It adds: “The Bank of Lithuania also found that the institution had not tested how business continuity plans would be implemented in practice. There is a warning for this.”
It also says that the firm has “taken steps to eliminate the violations in question”, including submitting a plan for fixing the identified deficiencies and indicating what actions it has already taken and plans to take in the future.
For now, the company has had its ability to establish relations with new distributors and intermediaries restricted, and it has until 31 March next year to mitigate the identified violations, and until 30 June to submit the findings of an audit.
Speaking to FinTech Futures, a Solaris spokesperson says that delivering the remediation actions highlighted in the central bank review has been “a core priority” for the company this year.
“We are working closely with the regulator and have proactively implemented the majority of the measures to reflect recommendations given by the Bank of Lithuania,” the spokesperson says.