Connectum voluntarily restricts business after FCA inspections and disappears into thin air!

Connectum, once a key player in payments for cybercrime organizations, appears to have disappeared after voluntarily limiting its activities following an FCA audit.

The payment institution, now controlled by Cambodian politician Sokha Heng, ceased providing services as of May 22, 2024, and its email address is no longer functional, raising concerns about the company's current status. Connectum is wanted by fund recovery organization EFRI to compensate victims.

Key points:

• Connectum, an FCA-regulated payment institution, will voluntarily cease trading from 22 May 2024.
• Change in ownership structure: Cambodian Sokha Heng, a politically exposed person (PEP), now controls more than 75% of the company's shares.
• Connectum has historically facilitated payments for cybercrime organizations, including Gal Baraka's E&G Bulgaria.

Brief description:

Connectum's involvement in laundering millions of dollars for fraudulent schemes, including those run by convicted Israeli cybercriminal Gal Barak, highlights the importance of strong regulatory compliance in the cyberfinance industry. FinTelegram continues to investigate Connectum and its links to Walletto, another financial institution involved in questionable activities.

Founded in 2014 by Latvian Edgars Lasmanis, Connectum was heavily involved in processing payments for fraudulent Israeli brokerage and cybercrime organizations, in particular the criminal ring led by Gal Barak. As a payment processor, Connectum played a critical role in laundering millions of dollars in fraudulent proceeds into offshore accounts between 2017 and 2019. Under the leadership of Lasmanis, Connectum maintained bank accounts at Deutsche Handelsbank and the Latvian JSC Rietumu Banka, ensuring the conduct of these illegal transactions.

In October 2020, Cambodia's Sokha Heng, wife of former Secretary of State Ing Boon Hoe, acquired more than 75% of Connectum, UK Companies House reported.

Despite the change in ownership, the business continued to thrive, reporting a turnover of £33.7m and profits of £7.5m for the year ending 31 March 2023 (screenshot left). However, following discussions with the FCA in May 2024, Connectum made a voluntary commitment to cease providing regulated payment services and began returning customer funds.

Wanted by EFRI

The European Funds Recovery Initiative (EFRI) seeks to hold Connectum and its executives accountable for the financial damage caused to victims of customer deception. Elfriede Sixt argues that there is clear evidence that Connectum was fully aware of the illegal activities of its clients. Despite this knowledge, Connectum knowingly processed transactions and facilitated the laundering of funds paid by victims. This indicates a serious compliance failure and raises serious concerns regarding the institution's compliance with AML/KYC standards.

Compliance Insight:

Edgars Lasmanis, founder of Connectum, also founded Walletto, an electronic money institution (EMI) regulated by the Bank of Lithuania. Walletto, a core member of VISA, offers payment card services and acts as an acquirer. A recent investigation by FinTelegram revealed that Walletto processes payments from RoboForex, an offshore broker illegally offering services in the EEA. This raises concerns about Walletto's compliance with identity verification and transaction monitoring procedures.

For the rapidly evolving cyberfinance sector, it is critical that payment processors and financial institutions such as Connectum and Walletto implement robust AML/KYC protocols to prevent money laundering and facilitate illicit transactions. Weak compliance measures can have significant regulatory consequences and pose a risk to the integrity of the financial system.