The Financial Conduct Authority (FCA) has launched an investigation into Euro Exchange Securities (EES), a payments company, over alleged shortcomings in its anti-money laundering (AML) procedures. The regulator is examining whether EES failed to properly identify and assess money laundering risks associated with its customers, the jurisdictions where it operates, and its own electronic money services.

EES, an electronic-money institution with operations across the United States and Europe, is also suspected of inadequate implementation of policies, controls, and procedures designed to mitigate money laundering threats. The FCA’s concerns particularly relate to customer due diligence, ongoing transaction monitoring, and internal governance frameworks.

While the inquiry is ongoing, the FCA clarified that it has not yet determined whether EES breached any regulatory requirements. The probe began last December when the FCA requested client documentation covering a sample of ten customers intended to represent a cross-section of EES’s broader customer base. The company complied by submitting the requested files and, subsequently, provided an additional 180,000 documents.

However, the regulator found a substantial portion of the material difficult to assess, citing problems such as unreadable documents, unstructured formats, illegible content, and system-generated records that complicated efforts to locate or verify specific information. Some materials also predated the relevant customers’ onboarding dates, raising further questions about record-keeping standards.

In June, the FCA compelled EES to cease operations and placed the company into administration, citing "unacceptable money-laundering risks" posed to the UK financial system. Reports indicate that in the previous year, EES processed over 20,000 transactions with a combined value exceeding £2.1 billion. Significantly, nearly all these funds were transferred on behalf of just 14 customers, each of whom had been classified by EES as high-risk for money laundering.

Matthew Long, director of payments and digital assets at the FCA, described the enforcement action as part of a broader initiative to tighten regulatory oversight and enhance compliance across the payments sector. EES was contacted for comment but has not publicly responded.