The customers of a UK-based fintech company have been left unable to access money in their accounts after the decision taken by the MFSA to freeze the activities at a bank co-owned by the company’s founder.
Financial Times reporst that “London-based LeoPay provides international money transfers and multi-currency bank accounts, but some customers began complaining over the weekend that they could no longer make payments while others discovered that their accounts had been closed without warning.
The company is owned by iCard AD, a Bulgarian company founded by Christo Georgiev, a self-described pioneer of innovative payment solutions who has worked in the fintech sector since 2000, according to a biography on one of his company’s websites.
The case raises concerns about regulation of the growing number of digital start-ups offering financial services in the UK, as rising numbers of customers keep large cash balances on upstart platforms rather than in traditional bank accounts.
LeoPay presents itself as a way for non-residents to have a de facto European bank account that can be used for salary payments and other day-to-day spending, but its customer deposits are not covered by deposit guarantee schemes.
The company is owned by Mr Georgiev co-owns Malta-based SataBank, which was set up in Malta in 2016, according to the Malta Independent newspaper, which carried a picture of Maltese prime minister Joseph Muscat shaking hands with Mr Mr Georgiev at an inauguration ceremony. Last week the Malta Financial Services Authority (MFSA) issued a public notice that ordered SataBank bank to stop accepting deposits or processing withdrawals and transfers “in order to ensure that the interests of the depositors are safeguarded”.
The Financial Times said that “LeoPay’s website was updated on Wednesday morning to remove all reference to SataBank. However, terms and conditions documents that have since been removed showed that its accounts were previously provided through a SataBank “e-money account”. This suggests that customers are being affected by the MFSA’s block on transactions. Funds placed into e-money accounts are not covered by Malta’s depositor and investor compensation schemes.