British digital bank Revolut withdrew its application for an e-banking license in Luxembourg, after a member of the country’s parliament questioned whether the company was complying with fintech regulations.
The Telegraph reported that Laurent Mosar, an MP for the centre-right Christian Social People’s Party, did not mention Revolut by name. But in a parliamentary question to finance minister Pierre Gramegna, Mosar said that “at least one major company that has recently applied for approval, would be flagged in its country of origin for non-compliance with existing regulations as well as for non-transparency.”
Revolut requires EU regulatory approval for access to the single European market, soon likely minus the Brexit-bound U.K. The company provides a range of banking services, including Visa and Mastercard debit cards and currency exchange.
Gramegna responded that Luxembourg’s Financial Sector Supervisory Commission oversees the regulation of financial institutions. Earlier this year, the CSSF began monitoring fintech firms based in the country.
Revolut told the Luxembourg publication Delano that its decision was “strategic,” and that it would instead focus on acquiring a license in Ireland, which has become a center for fintech development. The company also said it would be building a local banking team in Lithuania. “We’re excited to be working with some of the most highly regarded tech and financial services talent in both these countries,” the company said in a statement.
- Revolut was founded in 2015 by British-Russian entrepreneur Nikolay Storonsky. The company has seven million customers.
- The company has conducted more than 350 million transactions valued at almost $50 billion.
- Revolut’s fiercest competitor is digital bank Monzo.
- The exploration of Luxembourg and other locations as an EU base may be a hedge against Brexit. If Britain exits the European Union without agreement, British banks will lose their “passporting” rights to operate in Europe.
Karma Takeaway: Revolut’s expansion is a positive sign for investors, but it will have to navigate regulatory issues if it is to thrive in a changing European economic environment.