Wallter aim for excellence in risk management and compliance

July 25, 2021

March 2018 - Licence awarded & start of operations

The Bank of Lithuania has issued Electronic Money Institution licence for Wallter© in March 2018. Following formal procedures the Lithuanian office started operations in June 2018 with 2 employees.

2018 Q2-Q3 - Development of services

During Q2 andQ3 the team was formed, and local organization has started to provide services in July 2018, the Board has approved the Money laundering and terrorist financing prevention policy.

The Company started hiring more employees in Compliance department and by the end of year2018, it had 4 compliance officers.

2019-2020 - Managing operational risks

In 2019 Wallter© has focused on compliance and operational risk management, creation of new detailed procedures.

In March 2019 detailed procedures were written, Guides on Transaction monitoring desk reference and Onboarding desk reference were approved.

In December 2019 , the Committee on risk and compliance was formed. In February 2020, the Board has updated the Procedure for clients’ risk assessment.

In March2020, the Board has approved a new version of the Money laundering and terrorist financing prevention policy.

In April 2020 a procedure for KYC refresh was introduced.

In June 2020 a Company Wide Risk Assessment was performed.

In November 2020 – Suspicious transaction escalation procedure was introduced.

In 2020 Deloitte was contracted to audit Wallter© results for the year 2019. Findings were presented and discussed with the regulator and later fully implemented into Wallter®’s compliance procedures.

Q2 2020 - Strategic decision to lower risk appetite

The managerial team has adopted a strategic decision to lower risk acceptance in early 2020. Since February 2020, the client portfolio has started to change. Since then, a low risk portfolio (groups 1-3) is increasing, while the number of risky clients (groups 4-5) is constantly decreasing.

During year2020 about 70% of Wallter© clients were based in the Europe Union with following15% in the Asia and other 15% in rest of the world.

Q4 2020 - New top management& growth of compliance team

A new internal auditor Karolis Grikšas has taken position in October 2020. A new CCO and Country manager Justina Milašauskienė, former attorney, was appointed in November 2020, who initiated a company-wide renewal and systematic compliance revision.

Wallter© compliance team has increased more than twofold since the beginning of 2020.Compliance department had 7 employees in January 2020 and lists 18 in June 2021. Moreover, the confirmed target is to reach 25 employees in 2021. The new head of risk management department Saulius Blažiūnas was appointed in March 2021.

The Open source check and Retrospective transaction monitoring policies were approved in February 2021. These policies define procedures on usage of external opensource data for clients’ risks assessment and monitoring transactions retrospectively, also evaluating client risks.

In 2020 Q4 the Bank of Lithuania published a market report, showing that Wallter is 3rd largest electronic money institution in Lithuania with market share of 8,3% of the total income of all EMI (80 EMIs) in Lithuania.

From Q2 2021 - Updating service quality & risk management system

Following initiative of the new management team in late 2020 an internal reform was started to update service quality and risk management processes. The Board has approved a proposed new management approach, that process development, risk mitigation should be a constant task for all major departments.

Major areas for improvement – client risk data management (e.g. focusing on newly introduced client information update policy), operational risk management (e.g. introducing 250 rules vs. former 28 to monitor operational risks), strengthening remote customer identification, internal rules and procedures, growing internal functional teams.

In cooperation with the third party, Wallter© is providing more attention to retrospective transaction analysis. At the same time a new automated risk evaluation system has started its operation.

In June-July2021 the Board has approved:

·      A new Policy on customer onboarding procedure;

·      A plan for seminars and competence building on money laundering and financing of terrorism;

·      A plan to strengthen its transaction monitoring procedures and AI tools dedicated to transaction monitoring;

·      New risk calculation rules;

·      A new Board member responsible for AML/TF risk mitigation measures.

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