U.K. FinTech Stenn has reportedly collapsed over possible ties to a Russian money laundering scheme.
The company was placed into administration — a type of insolvency procedure — earlier this month after a reference to it appeared in a U.S. indictment in a money laundering case, the Financial Times reported, citing sources familiar with the matter.
The sources said that reference led Stenn’s lenders, including banking giant HSBC, to begin examining potentially suspicious transactions. Stenn — which had at one point been valued at $900 million — specialized in invoice financing for small and medium-sized businesses.
Sources told the FT that HSBC began investigating potentially suspicious transactions at London-based Stenn earlier this year after American prosecutors unsealed an indictment that included passing references to Stenn and its founder and CEO Greg Karpovsky. Neither Stenn nor Karpovsky were accused of wrongdoing in that case, the report adds.
However, the references to them in the indictment were enough for HSBC to investigate further, uncovering potentially suspicious transactions, the sources said.
Karpovsky told the FT that he was “cooperating” with Stenn’s administrators and that it “would not be appropriate” to speak about that process.
“However, I am obviously concerned about any allegations of impropriety against me and I deny any wrongdoing in connection with Stenn,” he said.
The FT report notes that the company’s collapse is likely to spotlight the due diligence of its banking partners and investors, considering that Stenn’s former auditor had resigned due to concerns about some transactions, and Karpovsky had also been involved in an invoice finance company in Russia that later imploded amid allegations of fraud.
The news comes at a time when anti-money laundering (AML) controls are “emerging not merely as a regulatory obligation but as a strategic priority for the year ahead,” as PYMNTS wrote last week.
As technology makes financial services faster and more accessible, the threat of financial crimes is rising, and regulators are demanding more vigilance.
“Against this backdrop, AML, which has traditionally been viewed as a cost center — a necessary burden to satisfy regulators — is becoming a cornerstone of competitive differentiation for financial institutions (FIs) in an era where trust is increasingly a marketable asset,” PYMNTS wrote.
Recent weeks and months have seen several FIs take measures to improve their AML measures, typically at the behest of regulators. For example, Wise updated its controls on the recommendation of a European regulator, while TD Bank is working on its risk controls as ordered by the U.S. government.
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