When it first opened in 2019, Migom Bank sought to answer the surging demand for international payment services. Migom’s services were based on digital banking technology created by software developers who previously had worked for Wall Street firms building quantitative trading and sophisticated financial applications. The core operational management was located in Europe, while an experienced fintech group in Russia handled sales and client support services.
Despite not offering services in the USA, the bank’s global success yielded positive enough results that a merger with a publicly traded US holding company became possible. The holding company was renamed Migom Global Corp and gave Migom a North American foothold.
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Dominica was selected as the headquarters for the bank due to its light regulation, familiar British law system, and straightforward administrative procedures. Realizing they would need a more global presence, Migom Bank management soon filed for a basic banking license in France, which was granted in 2019. The original investors exited the project before commencement of operations, but the bank launched its services in early 2020 with startup funding from a US-based private investor.
Migom Invests in European Banks as Successes Mount
The decentralized nature of the bank’s operations proved very successful during the pandemic, which started around the same time as the bank’s launch. During 2020 and 2021, revenues sky-rocketed with clients coming from fintech, crypto, gaming, international trade, and various other “underbanked” market segments. The seamless digital interface, user-friendly policies, and the quality of fiat and crypto banking services attracted customers, boosting adoption rates.
As revenue and scope grew and while the French banking license development slowed due to the pandemic, Migom’s holding company joined a group of investors contributing funds to capitalize and revive the distressed Latvian Baltic International Bank in early 2022. This involvement would have allowed Migom to expand its operations across Europe.
Russia’s War Disrupts Migom’s Foundation, Cascades to All Branches
As Russia began its military operations in Ukraine in early 2022, the European management of Migom Bank and its US holding company decided to buy out the original US-based investor (who was ethnically Russian) and part ways with the Russia-based sales and client support group. Migom cited that these individuals of Russian origin would impede the anticipated application by the Migom Global Corp to upgrade their stock market listing to NASDAQ.
The new team hired in Latvia took over the sales and client support functions. Instead of the originally intended decentralized business model, management focused on deploying services and employees inside the existing structure of Baltic International Bank by 2022 and moving away from the Dominica license by early 2023.
In late 2022, the Swiss-based Incore Bank, which provided Migom with vostro correspondent accounts in multiple currencies and secure crypto custody, radically changed its policies concerning Migom Bank, which was designated “ultra-high risk.” After two months of adjusting and halted operations, Migom Bank was forced to close its correspondent accounts at Incore bank.
At the same time, the second-largest Lithuanian EMI, Transactive Systems UAB came under scrutiny from the local Central Bank, resulting in the revocation of its EMI license. Another Lithuanian EMI, which served as Migom Bank’s backup correspondent account, also underwent Central Bank inspections at the same time leading to them closing Migom Bank’s accounts as a precaution.
Latvian Authorities Force Liquidation of Baltic International Bank
In December of 2022, Baltic International Bank was forced into liquidation by the local authorities due to uncovered actions of previous owners and alleged interference from the local American embassy.
By the end of 2022, Migom Bank found itself with no active correspondent accounts and client funds stuck in the liquidation of the Lithuanian EMI and in transition from two other correspondents to suspense accounts. According to conventional policies and compliance procedures, the funds suspended from the closed correspondent accounts could only be transferred to another Migom Bank correspondent account or a bank liquidator. These circumstances effectively paralyzed Migom Bank’s operations.
A Plan for Recovery, Hindered but Resolute
Since the beginning of 2023, Migom Bank has made vigorous attempts to restart operations, including developing ties with banks in African countries and the Middle East. However, attempts to continue correspondent services with mainstream banks have yet to be successful and the situation originating from late 2022 remains. Because of the forced liquidation of Baltic International Bank and separation from the original sales and support group, the customers of Migom Bank have been left largely uninformed of these developments. There are rumors of increasing rifts and disagreements between the US holding company and the European-based executives. As the result Dominica regulators had to step in and put the bank under a special supervision restricting certain operations of the bank and increasing their overall scrutiny.
Currently, the bank is facing an imminent liquidation if a possible workaround (proposed by some of the former key associates and new investors) is not executed soon. Negotiations are ongoing and may culminate with a potential resolution in the coming weeks.
