When Anselm Schmucki took over a tiny UK payments firm in 2019 and relinquished control in March this year, few paid much attention. But the little-known Swiss financier is now under intense scrutiny.
(Bloomberg) — When Anselm Schmucki took over a tiny UK payments firm in 2019 and relinquished control in March this year, few paid much attention. But the little-known Swiss financier is now under intense scrutiny.
Weeks after Schmucki sold all his shares in London-based Paystree Ltd., the Treasury Department’s Office of Foreign Asset Control sanctioned him and more than a dozen businesses allegedly under his control. These companies, the US government alleged, were aiding Russia’s war effort in its invasion of Ukraine.
In a May 19 statement, the US accused Schmucki of operating in the Russian financial-services sector, having “close financial relationships” with an unidentified individual charged with financial crimes and a company with suspected links to Russian organized crime and money laundering. He’s also alleged to have facilitated the sale of tens of millions of dollars of gold bullion.
The sanctioned companies include two where Schmucki’s fellow investor was the late Arne Treholt, a former Norwegian diplomat convicted of spying for the Soviet Union in the 1980s, filings show. Schmucki, 53, didn’t respond to multiple requests for comment.
Though Paystree hasn’t been sanctioned by OFAC or the UK or European Union, its ownership history once again turns the spotlight on such electronic money institutions, or EMIs, that help move more than $1.3 billion a day through the global financial system.
The UK’s Financial Conduct Authority has awarded hundreds of EMI licenses in recent years, enabling the recipients to process payments, hold client funds and issue electronic money. But the lightly regulated industry has faced criticism from organizations including Transparency International UK for weak controls and money-laundering risks.
The hazards are even more pronounced when the US and its allies are seeking to strengthen the unprecedented sanctions regime against Russia and close loopholes that allow evasion.
‘Fit and Proper’
Any investor who owns more than 10% of an EMI typically must pass the FCA’s so-called “fit and proper” test and have satisfactory levels of “honesty, integrity and reputation,” according to the regulator’s 290-page guidebook for the sector. The FCA said in March that it intends to take “more assertive action” soon against problematic actors, without specifying any.
Still, Paystree is the latest example of an EMI keeping its license despite being backed by individuals that government agencies have alleged have dubious credentials. A spokesperson for the FCA declined to comment.
Read More: UK Payment Firms Lack Controls, Pose Unacceptable Risk, FCA Says
“From the information available, it appears that the inactivity of the FCA would contradict their earlier promise of a more assertive stance towards granting licenses for EMIs,” said Nicholas Ryder, a University of Cardiff law professor who focuses on financial crime. “It appears to be the continuance of a worrying trend.”
Bloomberg News has reported how an EMI called Dzing Finance Ltd. is run by a Russian banker accused of looting Kyrgyzstan’s biggest lender and has borrowed millions of dollars from a company associated with sanctioned tycoon Oleg Boyko. Its license remains active, according to regulatory data. Both Boyko and the Russian banker have denied wrongdoing.
Another EMI called Transactive Systems Ltd. has been partly owned by a convicted felon in the US, Bloomberg News has reported. One of its senior officials is also facing separate US fraud charges. He has since left the company and denies wrongdoing. Regulators in Lithuania stripped it of its local license earlier this month because of poor anti-money laundering controls. It remains approved by the FCA, data show.
Paystree enables its customers to make international payments, according to its website.
“The banking alternative which brings you joy,” according to the website. “We are here for those who prefer to control their own life. Who appreciate freedom and prefer moving forwards. Who are seeking for innovations that make life easier. Simplicity, easiness, and innovation are our main principals.”
Ukraine sanctioned Paystree in October because it considered it a threat to national security, according to a person familiar with the decision. Officials in Kyiv became concerned over the company’s relationship with a Dubai-based investment firm, whose service providers operate in industries such as gambling and cryptocurrencies, the person said, asking not to be identified discussing confidential matter.
Crisis Manager
Months later, Schmucki transferred his Paystree shares to Guntars Reidzans, a Latvian banker who said he joined the firm as a “crisis manager” in 2022. Reidzans didn’t directly comment on Ukraine’s concerns about the firm, but said he’s hopeful those sanctions would be lifted soon.
“I soon realized that business performance at the time was lacking and that a management buyout was instrumental to enhance the efficiency,” Reidzans said in an email on May 30. “The management change was planned long before the sanctions were imposed.”
Schmucki, a former head of UBS Group AG’s Moscow office during the 2000s, took over Paystree not long after the FCA awarded the firm its EMI license, according to UK filings. He was based in the United Arab Emirates and never joined the board, the filings show.
Among the entities sanctioned by the US last month is DuLac Capital Ltd., a Swiss wealth-management firm with branches in Moscow and St. Petersburg. Schmucki is co-founder, part-owner and head of its Russian operations, according to Domino Burki, the company’s managing partner. He denied any wrongdoing and said that Schmucki didn’t want to comment.
DuLac’s main source of income was managing the fortunes of wealthy Russian entrepreneurs and families, Burki said in an emailed statement. Schmucki has agreed to sell his shares to the firm’s other partners as a result of the sanctions, he said. The company will have to be shut down “given the damage caused” following the sanctions, he said.
OFAC also sanctioned other entities allegedly controlled by Schmucki, ranging from Scottish limited partnerships — an opaque form of UK company structure criticized by Transparency International UK — to a Cypriot shipping firm and an Estonian cryptocurrency business. One firm in Hong Kong is “an apparent shell company likely used by Schmucki to purchase diamonds,” the US said.
The US also sanctioned two Maltese firms where Schmucki is the majority investor. Company filings show his fellow shareholder was Arne Treholt, a former Norwegian diplomat who was arrested in Oslo Airport in 1984 and later convicted of passing state secrets to the Soviet Union and Iraq over a nine-year period. Treholt died in February.
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