Revolut is at risk of losing its European banking licenses | Hacker News Reader

Revolut is at risk of losing its European banking licenses

siliconrepublic.com

78 pointsMordodeMaru40 comments

The sins of the father?

I wonder if there's more going on behind the scenes than meets the eye here. It seems very strange to me that Lithuania, who has put a massive amount of effort into becoming a friendly location for fintechs would risk alienating such a big company on such a flimsy pretext as the founder being Russian with a Russian father at Gazprom (I'm ignoring the server piece because I don't know what to make of that - Russia is a big market and if they wanted to expand I believe they need to have servers locally and it may be a cost cutting move).

edit to add sources for context: https://sifted.eu/articles/emoney-authorisation-lithuania/ - article describing Lithuania's push to become a fintech capital https://investlithuania.com/key-sectors/technology/fintech/ - Government website describing the process and their 'forward thinking' regulation https://www.engadget.com/2019/02/05/apple-russian-user-data-... - article about Apple's storing of some user data on servers in Russia to comply with the local data law

It's totally wrong to revoke the banking license simply because the founder's father is a bad boy. But it's a good reason to start the investigation. Probably that should even have been started before the license was given, not just now. Revolut is also funded by another Russian oligarch, Juri Milner - too many coincidences to me, and definitely worth digging deeper.

Gazprom logos are common on stadium billboards and team jerseys in a number of European football leagues, so that alone probably doesn't raise suspicion. It's probably the fact that this is a firm handling a lot of other people's money, in an industry that's tightly regulated to reduce fraud, money laundering etc.

Is it only about the father? They moved (or announced) their servers to Russia and have been known to abuse personal data (at least in the UK) of their customers. Now all of those might be coincidence...

> I wonder if there's more going on behind the scenes than meets the eye here.

There are additional risks for Lithuania with regards to Revolut which are not often discussed (but they have been raised by the parties concerned, and others, etc.) Consider: Revolut is now (with its new banking license) able to take in customer deposits. They are (by law) insured by the state (up to a certain sum). If the bank goes bust, the state-owned insurer is on the hook. Now consider Revolut's pan-European expansion plans (flaunting and expecting continued aggressive growth). There is a lot of exposure here; through a pretty dodgy company no less. So there really is a lot to consider here. Bank of Lithuania (a regulatory body) inviting Revolut themselves also doesn't look too good. Hence parliamentary oversight steps in, with legitimate concern on hand. Bear in mind that core intention is not always seeped in some kind of behind-the-scenes malice, or pure populism, or what have you.

I personally see fintech as a field with some interesting companies and potential for innovation, but also as a possible catalyst / accelerator of the next tech-related bubble bust. One should invest into the field with care and cautiousness.

Only deposits are insured. Having account on Revolut does not count as a deposit. So until Revolut starts offering such option there is no risk. And not sure if current license permits accepting deposits.

Yes, of course; but deposits will come, Revolut communicated as much (IIRC). Also (IIRC) the license does permit accepting deposits, but as of now there are limits / quantity constraints imposed. So there is that. But those limits can be raised (and intuition (not knowledge) tells me it may not be hard; but this also stems from my distrust of BoL and its regulatory oversight capacity).

They should loose their license for their business practices [1] irregardless if they have ties to the Kremlin.

[1] https://www.finextra.com/newsarticle/33454/tales-from-the-da...

All I care about is that my funds are safe. I currently have a lot in Revolut, I've had nothing but positive experiences with them but moving to another bank is not a big deal for me.

Do they actually operate as a bank yet? Just having licenses doesn't mean they use them.

If not, it's just another Paypal, they can lock you out anytime they want, and the "due process" to resolving it is their chat and their rules.

Agreed. I've had nothing but positive experiences with Revolut. Their app is excellent and I have been using it almost exclusively for the past 6 months. I have never had an issue contacting customer support (I do pay)...and it makes me smile how I can have crypto alongside fiat currency. I would say about 20% of my contact list also use Revolut and I have only heard positive experiences from them.

If they aren’t part of the legitimate banking system then likely your funds are not safe. In the US you are automatically insured by the FDIC for up to $250k per bank and per account type (like savings and checking).

Does the EU have a similar concept? If so, will you lose insurance if their license is revoked?

Yes, EU has something like that for up to 100000 EUR per person per bank. Revolut is not a bank, so this doesn't apply there.

If they currently have a European banking license, how are they not a bank?

Ask them. You can have a banking license and operate a grocery shop. I guess you can have a banking license, not be a bank, and do some other money related business.

Edit: I just looked at their website and didn't found any mention that they are a bank. I'll violate their ToS and link to their website here:

https://www.revolut.com/legal/website-terms/

> We are regulated by the Financial Conduct Authority as an Electronic Money Institution under the Electronic Money Regulations 2011 for the issuing of electronic money. We are included in the FCA’s registered of electronic money institution firms (Firm Registration Number 900562) which can be found on the FCA website.

"Electronic Money Institution" is not a bank.

Interestingly you can't link to their website from social media without violating their ToS. Funny. Also you can't link to them if you want to criticize them.

Without looking too far into it, it has potential to be a re-run of the Landsbanki/Kaupting affair.

Your funds are probably not safe in Revolut. They have a notoriously poor security culture.

Same here. Put a lot of funds there and only have good experience. I'm hopping a bank can't mtgox/btce

> The Lithuanian government has accused Revolut of having Kremlin ties before, which reached boiling point when it was reported that the company would be moving all of its servers to Russia.

That I did not know. I was an early user of Revolut but I've been done with them for a while (their marketing team is responsible for me dropping it). Time for me to send them a GDPR removal request I guess. They don't provide any way of deleting your account other than going through their awful chat support system so I guess I'll have to suffer through that again.

I have the same problem and didn't use it because of their scummy marketing practices.

I uninstalled the app thinking I could just log in to the website to cancel it but no luck, you have to phone.

Is there a simple way to submit GDPR deletion requests like this? They're being deliberately obtuse with closing accounts. They deserve to lose their licences.

And on top of that there's their culture:

https://www.wired.co.uk/article/revolut-trade-unions-labour-...

My account was deleted without any intervention from myself. I assumed it was because I had not used the account for some time and the balance was < 1 euro?

Like others have mentioned, I found their customer service to be worse than useless but kept the account as a stand-by.

Obviously, since I no longer have an account, the options for submitting a GDPR deletion are somewhat limited.

A GDPR request may not go far because banking regulations supersede GDPR when it comes to retaining records that might be required for financial investigations. I believe in a UK there's a requirement that they hold onto details of any transactions done for at least eight years.

I understand the banking requirements but in theory they should only be keeping certain information for security practices and scrubbing it from everywhere else (e.g. marketing/analytics etc)

Is there going to be much of their data they hold on you that they’d be able to delete? I’d imagine most of it would be required to be retained under various financial regulations, which would override your rights to removal.

If they lose their licences then they'll have to remove all of it.

I doubt it. They could lose their license and still have to make their records available for audit, at least for tax purposes.

> when it was reported that the company would be moving all of its servers to Russia.

Whoa, that's interesting news. Do you have a link or citation for that?

Only the parent article so far I'm afraid. Though I'd be interested in more citations too.

That's fake news and founders have denied that multiple times.

European data protection laws are pretty strict. You can't just move data outside of Europe, you have to prove that it will be handled in accordance with European laws etc. I don't know how geo politics feeds into the decision, but I would be surprised if European citizens data were being exported there.

Yep. I am guessing that the real story might be that EU data stays in the EU, but as Revolut launches in Russia, Russian data stays on servers in Russia.

https://www.finextra.com/newsarticle/32213/revolut-launches-...

https://www.rbc.ru/finances/05/06/2018/5b1672e09a7947880015f...

May be not related to the headline, but Revolut is locking many accounts without any reasons and not much can be done... Would be nice to know where to send a complaint about them in Lithuania, any ideas?

Let me explain what's actually happening.

Some context first.

Lithuania's Central Bank (Lietuvos Bankas) is currently led by a rather modern team which created a process that allows fintech companies to acquire "money institution" or bank licence in a sandboxed environment. That means that companies can only do non-risky business (like transfers) with a special oversight. LB was/is quite vocal about their interest in attracting companies from the UK in a post-brexit Europe as a banking licence in Lithuania is valid in the whole EU.

The person that leads the central bank is Vitas Vasiliauskas and he is strongly supported by the current president.

Quite a few companies have shown interest in this fast-tracked process (even Google opened their branch). Revolut was one of them, as it is really popular in Lithuania. I believe, that Lithuania is the third country by the number of Revolut users (a year ago 3% of the population were using Revolut).

The commission (The Commission of Budget and Finance) that's responsible for the investigation is lead by Stasys Jakeliūnas. He is a member of the current ruling pro-peasant party. The commission itself is a part of the parliament.

One of the other things that the commission is also currently investigating is the way the government has handled the crisis of 2008 and the role that the banks have played when interested rates were being adjusted. The government was led at that time by the current opposition.

The meat of the story.

Next month there is going to happen the elections for the parliament of the EU, and a few weeks after a presidential election. In 2020 MP elections are going to happen.

The current consensus is that whatever Mr Jakeliunas is doing is for the sake of the elections. Their (LŽVS - peasant) party electorate is rather uneducated and hates banks (banks=evil) in general so doing something against the banks is supposed to score points.

Since the current president supports the candidate that's not supported by LŽVS, going against LCB and Vasiliauskas is supposed to score some points for their candidate (or rather something against the other leading candidate). Also, they intend to score some points against the current opposition party which is leading the polls due to the supposed connection in mishandling the banks and the crisis itself in 2018.

Finally, since Revolut is backed by the investors (DSI Global) that are originally from Russia and one of the Revolut's founders is Russian that's another batch of free points because Lithuanian public hates Russia due to rather well-known reasons.

So just you know, LCB and VSD (Valstybės Saugumo Departamentas - CIA equivalent in LT) has done a thorough background check on Revolut and found no national security risks.

I hope this paints a much clearer picture and I didn't miss anything important.

TLDR; Jakeliunas is playing his part for the election and in the process of doing that he is doing irreparable damage to the global image of Lithuania.

What's also worth mentioning is that Jakeliunas applied to work for LCB more than once and was denied so there is a version of having a personal grudge against Vasiliauskas since Revolut is held as one of the success stories of the new policy.

Sounds reasonable to me. Typical Lithuanian politics and a try to compromise ex-banker president candidate painting all financial institutions black.

It is probably best to avoid political commentary on HN but since you provided (one possible) political interpretation of these events which I am convinced is absolutely incorrect, I feel compelled to (merely - nothing more) note for others that it is just one possible interpretation; and that calling it the "consensus" is quite a stretch; even when one's scope is restricted to employees (past and present) within BoL. (I grant that yours is one possible narrative, of course). I will add a couple of notes here and will then suggest not to pursue the matter further, since its nature is both speculative and political. :)

I will only ask you to consider --

> Next month there is going to happen the elections for the parliament of the EU, and a few weeks after a presidential election. In 2020 MP elections are going to happen.

Consider observing how investigations will continue after the elections above (need to wait for that). (2020 elections... may as well say that everything is done as a function of the four year election cycle in that case, but that would be a bit moot, I would think). Also consider that the recession / VILIBOR etc. investigation conclusion dates were pushed ahead past the target May 2019 election dates (which had been agreed by a parliamentary vote back in 2018, voted for by opposition as well, including their main presidential candidate (she hadn't decided to go ahead with her candidacy back then), by the way) - and this push-ahead was an idea suggested and advocated by the chairman of the commission. P.S. besides VSD there is also FNTT, and FNTT has a pretty different (and rather bleak) outlook on these matters.

Why should one avoid political commentary on HN? It's FULL of it.

>"consensus" is quite a stretch

Well, for everybody that's not related to LŽVS.

>which I am convinced is absolutely incorrect

You forgot to share the things why do you think that's incorrect.

> Well, for everybody that's not related to LŽVS.

That is not true: there are people in BoL who do not share your view at all. How do you think the internal VILBOR report came about and resurfaced initially (BoL was later forced to publish it)? Unfortunately, we will have to be patient until the names and views of the people become public, if it comes to that. I hope it does, but there is also backlash and retribution for them awaiting from within BoL. I know this all sounds speculative, so the only thing I can ask is some patience.

> You forgot to share the things why do you think that's incorrect.

I can expand, but I do not think this is the place to do so. I also do not think I am capable of currently convincing you otherwise; I hope in time we shall see. I'll consider adding more details later. But my purpose in replying to you was to merely communicate that there is no definite consensus at all.

Following up on your prompt: people and documents are resurfacing (and will continue to do so in the future), but for starters (these are internal LB reports and people, calling VILIBOR a cartel (possibly too strong a word)): https://www.15min.lt/verslas/naujiena/finansai/viena-nuomone...

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