Revolut has announced that it is moving its Irish users’ accounts to Revolut’s business in Lithuania. The move, which will happen in December, is temporary while the financial technology company awaits the outcome of a licensing process with the Central Bank of Ireland.
Revolut will transfer its Irish users to its e-money licenced business in Lithuania (where it also has a banking licence). This means Irish customers will then be regulated by Lithuania's Central Bank and not the FCA.
The money transfer and exchange company is currently licensed in the UK by the Financial Conduct Authority (FCA). It has an electronic money or e-money licence in the UK, not a banking licence, and has until now been using that same e-money licence to operate in Ireland under EU passporting rules.
These passporting rules allow a bank or financial institution which is licensed in one EU country to ‘passport’ or transfer the licence to another country without having to get full regulatory approval all over again.
However due to Brexit, and the lack of any sign of an agreement between the UK and the EU on many issues including financial services, Revolut's UK e-money licence will no longer be valid in Ireland come the end of the year. Customers will be transferred to the Lithuanian e-money business, not the Lithuanian bank business, which lies in a separate entity.
Also, as an electronic money institution, Revolut is required to segregate and safeguard its customers’ funds in a separate client money bank account. In the case of Irish customers, the client money bank account used to be with Lloyds in the UK and Revolut, in theory, has no access to this money.
Going forward, the client money bank account or holding account is said to be JP Morgan.
Commenting on the news, Head of Communications and PR at comparison and switching site bonkers.ie, Daragh Cassidy said, “With all the focus on Covid over the past few months one huge upcoming event has gone largely under the radar recently; Brexit. This will have a detrimental impact on consumers and business all over Ireland and in the first sign perhaps of the chaos to come, Revolut has announced that it is temporarily moving its Irish customers to its e-money licenced business in Lithuania."
Going forward Revolut is working on getting an e-money licence from the Central Bank of Ireland (CBI), which is expected to be approved in the coming year or so, though no firm timelines have been agreed.
When this happens Revolut customers in Ireland will be migrated to its Irish business and protected and regulated by the CBI, but it will mean that their IBAN and BIC numbers will change once again.
Source: www.businessworld.ie
