Banco de España Fines Pecunpay for Regulatory Non-Compliance

The Banco de España has sanctioned the Spanish fintech company Pecunpay with a substantial fine after identifying four regulatory infringements across 2021 and 2022. The central bank pinpointed several areas of non-compliance that led to the disciplinary action against the firm and its executive team.

The first infringement involved inadequate coverage of the firm’s own funds, which reportedly fell below 80% of the required minimum for over six months, between at least December 2021 and December 2022. The second issue was identified as deficiencies within the organizational structure, internal control mechanisms, and administrative and accounting procedures, particularly related to risk management and control, jeopardizing the firm’s solvency or viability.

Additionally, Pecunpay was found to be non-compliant with obligations from the Real Decreto-Ley 19/2018 of November 23, concerning payment services and other urgent financial measures. The fourth and final cited violation involved breaches of order and discipline rules contained in the Law 21/2011 of July 26, on electronic money, particularly those related to guarantee and safeguarding rules for customer funds and the charging of fees.

As a result, Pecunia Card, operating under the commercial name of Pecunpay, faced an aggregated sanction of 1.1 million euros. This amount was reduced by 40% under the reductions contemplated in article 85 of Law 39/2015, resulting in a significant, yet reduced, penalty for the firm.

The Bank of Spain also held individual members of the executive team accountable for the breaches. José Enrique Sancho Gargallo, César Molinas Sans, and other directors faced fines ranging from 17,400 euros to 36,000 euros for their roles in the infringements. These fines also benefited from the 40% reduction applied to the company.

This case underscores the regulatory scrutiny fintech companies face and the importance of adhering to comprehensive compliance measures, especially in the rapidly evolving financial technology sector. The fines levied against Pecunpay serve as a reminder of the significant financial and reputational consequences of regulatory non-compliance.