FCA Probes Euro Exchange Securities UK Over Money Laundering Rules

The Financial Conduct Authority said on 17 September 2026 that it has opened an investigation into potential offences by Euro Exchange Securities UK Ltd, stating that the authorised electronic money institution may have committed offences under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 between 1 February 2020 and 4 June 2026.

The regulator said the firm may have failed to take appropriate steps to identify and assess the risks of money laundering, including in relation to its customers, the countries or geographic areas where it operated, its services, its transactions and its delivery channels, and to sufficiently document and update that assessment. It said the firm may also have failed to establish and maintain policies, controls and procedures to mitigate and manage effectively the risks identified in that assessment, citing customer due diligence, ongoing monitoring controls, internal governance and oversight, resourcing and allocation of responsibilities, and record-keeping and escalation and reporting mechanisms. The FCA stated that it has not yet reached any conclusions in the investigation as to what has happened or as to whether the firm has breached any relevant requirements.

The investigation follows supervisory and court action taken against the firm, known as EES, in June 2026. On 2 June 2026, the FCA required the firm to cease carrying out any regulated electronic money or payment services and, on the regulator’s application, Duncan Perring and James Bennett of Teneo Financial Advisory Limited were appointed by the Court as interim managers over EES on 4 June 2026 under the Payment and Electronic Money Institution Insolvency Regulations 2021. The FCA said at the time that serious concerns around the way EES operated its business indicated significant risks of financial crime, including systemic weaknesses in the firm’s financial crime framework and safeguarding arrangements alongside its ownership and governance, and that these risks could have had an impact on both consumers and the integrity of the market.

First Supervisory Notice Findings

The FCA published a First Supervisory Notice dated 2 June 2026 on 2 August 2026. The notice prohibited EES from carrying on electronic money or payment services without the FCA’s prior written consent, including onboarding new customers or accepting new funds from existing customers, and imposed an assets requirement under which the firm must not return, transfer or otherwise deal with funds received in exchange for electronic money without prior written consent and must ringfence all relevant funds in a designated safeguarding account. The firm was also required to notify customers, banking partners and payment services providers, display prominent notices on its website and account login screens, deliver weekly bank statements to the regulator and secure its books and records within the UK.

According to the notice, EES was authorised as an electronic money institution on 20 July 2018, with permissions covering depositing and withdrawing cash from payment accounts, executing payment transactions with or without credit, issuing payment instruments or acquiring payment transactions, money remittance and issuing electronic money. The firm, based at 107 Great Portland Street in London, provided multi-currency electronic money accounts, money remittance and payment card services to corporate and retail customers.

The notice states that the FCA’s Supervision division issued an information requirement to the firm on 5 December 2025 under section 165 of the Financial Services and Markets Act 2000, requesting ten client files selected as a representative cross-section of the customer base across risk ratings, customer types, sectors and jurisdictions. The firm provided the files on 8 December 2025 and, after indicating that additional material was held across multiple internal systems, delivered approximately 15GB comprising around 180,000 documents on 23 December 2025. The FCA found a substantial proportion of the files unreadable, lacking identifiable formats or requiring multiple applications to access, and the material unstructured. During systems walkthroughs on 12 and 19 January 2026, the firm was unable to locate or produce documentation evidencing customer risk assessments, customer due diligence or monitoring activity.

The FCA assessed all ten reviewed files as inadequate. The notice records that there was no documented rationale explaining how customer risk was assessed, that in several cases no customer risk assessment had been completed before onboarding, and that a majority of files contained no evidence of required approvals, including senior management or MLRO sign-off. Enhanced due diligence was deficient in all six files where it was required, with no source-of-funds or source-of-wealth verification in any high-risk relationship reviewed. Screening for politically exposed persons, sanctions and adverse media was deficient in six of the ten files, in one instance using an incorrect spelling of a customer’s name, and the FCA said it identified adverse open-source material relating to an alleged money laundering scheme and an FBI investigation that the firm did not identify.

In one client file, the firm recorded 4,968 transaction monitoring alerts as “not suspicious”, of which 3,294 had no documented rationale, 294 remained unresolved and only one had been escalated; the firm confirmed that responsibility for reviewing alerts rested with a single individual. The notice also states that the firm’s safeguarding approach was limited to transaction-level reconciliation, with no aggregation of customer entitlements reconciled against safeguarding account balances as expected under regulation 20 of the Electronic Money Regulations 2011 and the FCA’s March 2026 Payment Services and Electronic Money Approach Document.

Special Administration and Customer Funds

On 11 June 2026, the High Court confirmed the appointment of special administrators for EES, naming Perring and Bennett as joint special administrators under the Payment and Electronic Money Institution Insolvency Regulations 2021. EES did not seek to overturn the court’s initial decision and agreed it was not in the company’s interests to seek to return to normal trading. The FCA said the administrators had taken control of the firm and secured a significant amount of material and frozen funds, and that they are responsible for managing customer claims against the firm and returning funds to customers where possible.

The FCA described the case as the first of its kind and said it acted with partners across government, including the Security Industry Authority, as part of joint strategies to disrupt financial crime. Matthew Long, the FCA’s director of payments and digital assets, said at the time: “The risk of payment firms being used by criminals to launder cash to fund other offences is significant, which is why they must meet expected standards.”

The FCA stated that the Financial Services Compensation Scheme does not apply to electronic money or payment services, and that e-money firms must instead comply with requirements on how customers’ money should be protected, known as safeguarding, whose purpose is to protect customer funds if a firm fails. The special administrators will carry out an assessment of all customer funds held by the firm to confirm the current position. Special administration carries objectives beyond those of an ordinary administration, including returning customer funds as soon as reasonably practicable and ensuring timely engagement with payment system operators and the authorities, including the FCA.