In 2020, the number and value of payments made through CENTROlink – the Bank of Lithuania’s payment system – doubled, while instant payments increased by more than four times, announced the Bank of Lithuania.
CENTROlink payment system for FinTech companies aiming to provide services in the EU/EEA
During 2020, more than 95 million payments (compared to 43 million in 2019) were made within CENTROlink, with their value reaching almost €170 billion (in 2019 – €88 billion). Currently, CENTROlink services are used by 136 payment service providers established in 14 European Economic Area (EEA) countries (in 2019 – 103 entities). On a year-on-year basis, the number of instant payments in 2020 increased three time. 26 Lithuanian and EEA payment service providers have the opportunity to offer their customers instant payment services through CENTROlink. Once participants of the CENTROlink system, they can offer instant payments 24/7/365, as well as standard credit transfers and direct debit services.
On average, more than 260 thousand payments, the value of which exceeds €460 million, are made daily through the CENTROlink infrastructure. Since the beginning of this year, the Bank of Lithuania has significantly reduced and harmonised CENTROlink fees for incoming and outgoing Single Euro Payments Area (SEPA) credit and instant payments, and they will be further decreased for financial institutions making more than 30 million payments a year. Moreover, separate customer and own funds accounts will be opened for electronic money and payment institutions, accounting for more than 80% of all payments.
“The beauty of CENTROlink is that it is opens for the European Economic Area licenced non-banking FinTech companies, i.e. e-money and payment institutions direct access to SEPA exactly in the same way as the banks are connected. Moreover, CENTROlink members are allowed to provide IBAN format accounts for their clients and safeguard client funds in the Bank of Lithuania. All that makes CENTROlink especially attractive for FinTech companies planning their activity in the EU/EEA and make them independent from the commercial banks”, – tells Kęstutis Kvainaus, attorney at law of ECOVIS ProventusLaw.
From February 2020 the Bank of Lithuania (Central Bank) has extended the capabilities of CENTROlink system previously used only for the transferring of Euro (EUR) payments withing Single Euros Payment Area (SEPA). Upgraded system goes beyond SEPA zone and opens a gateway to TARGET2 accessing more than 55,000 banking institutions in EU/EEA area and worldwide.
Increased attention to AML requirements
Since the beginning of this year, the Bank of Lithuania has changed the fees applied to CENTROlink services and is committed to take a more rigorous approach in assessing payment service providers and their management reputation, as well as cases where they are subject to certain sanctions. The activities and transactions of payment service providers are closely monitored and, in case of any doubts regarding adequacy of their operational risk and anti-money laundering measures, their access to the system may be suspended or terminated. Due to this and other reasons, 10 institutions have already been denied access to the system since 2016 (four of them were suspended in 2020).
“This case illustrates the importance for FinTech companies to be able to monitor theirs clients in AML/CTF processes and, more generally, the necessity of having a tailored, risk-based sanctions compliance program”, comments Kęstutis Kvainauskas.
Although money laundering and terrorist financing prevention is a challenging and demanding task, but ECOVIS ProventusLaw can also guide FinTech companies towards successful implementation of AML / CTF processes. It offers clients AML training, indipendent AML audit, ML /CF rist assessment, know your customers services.