Supreme Court of Lithuania ruled on e-money institution’s duty to safeguard clients’ funds
On 20 December 2018 the Supreme Court of Lithuania adopted precedential ruling emphasizing e-money institution’s duty to safeguard clients’ funds and providing guidance on how this duty should be performed.
The Supreme Court of Lithuania ruled that safeguarding of clients’ funds by way of keeping them in a segregated bank account obliges e-money institution to disclose in a clear manner the fact that segregated account is opened for the benefit of its clients and that ownership towards the funds credited with the segregated account belongs to e-money institution clients. Failure to comply with such duty would make it impossible to withdraw clients’ funds from the segregated account opened with a bank in case of its bankruptcy and leaving all the risks to the e-money institution.
This precedential case sets an important rule in Lithuanian Fintech regulatory framework. It provides clarity both for e-money and payment institutions by explaining how the duty to safeguard clients’ funds should be performed in order to ensure rights of the clients towards their funds.
WALLESS attorney Simona Kisunaitė advised on the applicable regulation and handled the entire litigation process for Credit Union Amber, which was defendant celebrating victory in this case.