DOJ Opens Inquiry Into Euro Exchange as U.K. and Puerto Rico Regulators Move on Related Firms

The U.S. Department of Justice is reportedly digging into the company chain around Euro Exchange Securities, after British authorities seized the payments firm in June over possible anti-money laundering (AML) violations. For high-risk PSPs, the useful part is not the drama but the pattern: once one regulator moves, related entities and counterparties can quickly become part of the same file.

1. The DOJ is seeking information from the court-appointed administrators handling the wind-down of Euro Exchange and has sent a subpoena to Banex International Bank, a related company in Puerto Rico, Bloomberg News reported on Wednesday (Oct. 14).
2. The U.K.’s Financial Conduct Authority (FCA) launched an investigation into possible offenses at Euro Exchange last month, after forcing the company to cease regulated activities in June. The regulator had alleged Euro Exchange presented “unacceptable money-laundering risks,” before moving the firm into insolvency a week later.
3. Euro Exchange is one of the U.K.’s electronic-money institutions, which Bloomberg described as loosely regulated payments firms that processed about 4.3 billion pounds ($5.7 billion) of transactions every day last year, according to FCA data. That is the backdrop: a large processing volume, but not much tolerance for weak AML controls.
4. Euro Exchange processed 2.1 billion pounds of transactions during a 12-month period before its seizure, nearly all on behalf of just 14 clients that it had determined posed a “high risk” of money laundering, Bloomberg reported. In practice, concentrated exposure to a small number of high-risk merchants is exactly the kind of footprint that attracts attention once things start unraveling.
5. Euro Exchange and Banex are among a group of companies headed by Miami-based businessman Luis Gasparini, Bloomberg said. When Puerto Rico regulators seized Banex in September, they said the company was insolvent and burdened with “serious financial, operational, accounting and control deficiencies,” while the Office of the Commissioner of Financial Institutions (OCIF) also alleged that depositors’ funds had been misappropriated by Gasparini.

For PSPs and banks that work in high-risk verticals, the takeaway is straightforward: regulator interest can move across jurisdictions and through related entities faster than payment flows do. Once that happens, the question is no longer just whether a merchant file looks messy, but whether the whole structure can survive scrutiny from more than one authority at once.