Migom Bank began its journey in 2019 to tackle the growing need for international payment service options. Digital banking technologies developed by engineers experienced in building quantitative trading and complex financial applications for Wall Street laid the foundations for Migom’s services. A team of fintech experts in Russia handled the sales and client support services, while primary operational management remained in Europe.
Even though the bank did not offer services in the USA, Migom’s success eventually led to a merger with a publicly-traded US holding company. The holding company was rebranded to Migom Global Corp., giving the bank a foothold in North America. Migom then chose Dominica for its headquarters due to the low level of regulations, the prevalent British legal system, and the relatively simple administrative structure in the country.
Migom Bank soon sought to expand its international presence and applied for a basic banking license in France. Despite the initial investors pulling out before the bank could begin operations, Migom opened for business in early 2020 thanks to seed capital from a private investor in the United States.
Migom Invests in European Banks
The decentralized nature of its operations allowed Migom to continue its successful trajectory in Europe despite the COVID-19 pandemic arriving at about the same time as Migom’s launch. Throughout 2020 and 2021, the bank witnessed rapid growth in revenue thanks to clients from numerous “underbanked” fintech sectors like crypto, gaming, and international trading. The bank saw a surge in adoption rates because of its straightforward user interface, client-centered policies, and high-quality fiat and crypto banking services.
While the French banking license development procedure slowed down due to the pandemic outbreak, revenues and new opportunities grew. As a part of its strategic expansion, Migom’s holding company decided to fund the Latvian Baltic International Bank as an investor group in early 2022. This involvement was instrumental in helping Migom spread its services throughout Europe.
Operations Disrupted as Russian War Intensifies
Russian military activities in Ukraine began in early 2022, prompting Migom Bank’s European and US managers to buy out the initial US-based investors because of their Russian ethnicity, and sever ties with the Russia-based sales and customer support team. At that time Migom released a statement that any association with Russian nationals would hamper the company’s plans to achieve its stock market listing on NASDAQ. The newly hired team from Baltic International Bank would assume the sales and customer support responsibilities from that point on.
The bank’s focus shifted from the decentralized business model and now prioritized implementing services and managing staff within the existing structure of Baltic International Bank. The holding company also planned to do away with the Dominican license by the start of 2023 and switch to a European regulatory structure.
Late in 2022, the Swiss-based Incore Bank, which had previously provided Migom with vostro correspondent accounts in different currencies as well as a secure crypto custody, altered its compliance policies, labeling Migom Bank an ‘ultra-high risk’ venture. After two months of adjustments and suspended operations, Migom Bank terminated its correspondent accounts at Incore Bank.
Simultaneously, Central Bank officials in Lithuania began their inspection of Transactive System UAB – the country’s second-largest EMI and another Migom’s correspondent – leading to the termination of their EMI license. Migom Bank’s accounts were closed as precautionary measures when another Lithuanian EMI, which functioned as Migom Bank’s backup correspondent account, also came under Central Bank scrutiny.
Baltic International Bank, Liquidated by Authorities
By December 2022, Latvian authorities liquidated Baltic International Bank after discovering undisclosed plans on the part of the bank’s previous owners and allegations of influence from the American embassy.
The dissolution of the Lithuanian EMI and the transfer of funds from two other correspondents to suspense accounts left Migom Bank without any operational correspondent accounts, freezing their client funds.
Conventional financial policies and compliance procedures only allow banks to move frozen funds from a suspended correspondent account to another correspondent account under the company’s name or a bank liquidator. Migom Bank’s operations were effectively halted as a result of these partnership losses.
Turning the Tide: A Plan for Recovery
Throughout 2023, Migom Bank made concerted efforts to reopen by forming connections with financial institutions in Africa and the Middle East. Due to the issues faced in 2022, efforts to restart correspondent services with larger mainstream banks still proved futile. As a result of the liquidation of Baltic International Bank and being cut off from the original Russian team of sales and support experts, Migom Bank’s clients have mainly been left unaware of the ongoing developments.
Disagreements and tensions between the US holding company and European management are reportedly on the rise. Dominican regulatory agencies had to place the bank under increased monitoring, limiting it from providing certain services and increasing restrictions.
Presently, the bank is working on a solution offered by former senior associates and new investors. If it is not implemented, the bank will be forced into liquidation. A resolution is expected in the following weeks as negotiations continue.