Beware Of White-Labelled Electronic Money Institutions (EMIS)
14 December 2023
In the last few days, two foreign exchange firms founded by Rajesh Agrawal, the recently replaced London Deputy Mayor for Business, have ceased trading, leading to the shuttering of client accounts. Effectively, this means customers can’t gain access to their funds, with the likely outcome being that the money has gone for good.
The first of these firms, RationalFX, claimed to have handled over $12bn in international payments in more than 50 currencies. Xendpay, another firm Agrawal set up, appears to have suffered the same fate.
Quite why these 2 Electronic Money Institutions have all but closed up shop is unclear but a hammer-blow for those affected. Apart from being founded by the same individual, one significant thing that they had in common, however, is they were both white labelling businesses. A potential red flag.
Given what’s happened here, it clearly pays to think twice before using a white-labelled provider for international currency transactions. It’s vitally important to understand the nature of the beast you are dealing with and, ultimately, who has control of your funds.
What is white labelling?
Firstly, it’s fair to point out that there is nothing new about white labelling. It has widespread use across multiple business sectors – and more often than you might care to realise.
In a nutshell, white labelling refers to the practice of one company providing a product or service, with another company rebranding and selling it, as if it were its own. Here's how the white labelling process typically works:
- The white-label provider develops, manufactures or offers a product or service. This could be anything from software and apps to physical products or financial services.
- The client company, which may have its own brand and customer base, purchases or licenses the product or service from the white-label provider. The client then rebrands it with its own logo, name and other branding.
- The client sells the rebranded product or service to its customers as if it were its own. The end-users often interact with the product or service, without necessarily knowing that the underlying provider is involved.
What is the attraction of a white label FX brokerage?
There are a number of reasons why someone would establish a white label foreign exchange brokerage. Firstly, there’s the low cost to entry, it doesn’t require a big infrastructure or really any prior experience and there are unlikely to be any licensing requirements. Within a matter of weeks, the operation should be good to go. That’s one reason why so many of these white label organisations spring up – pretty much anywhere.
What are the risks associated with using a white-labelled EMI?
Here are some key considerations to help you evaluate the potential risks associated with white-labelled EMIs:
- Check the reputation and track record of the company behind the white-labelled EMI. If the parent company has a strong history of regulatory compliance and reliability, it may mitigate some risks.
- White-labelled EMIs are typically operated by a third-party provider on behalf of another company. Ensure that both the white-labelled service and the underlying provider are fully compliant with financial regulations in the relevant jurisdictions.
- Consider the financial stability of the underlying provider. A financially stable provider is more likely to maintain the reliability and continuity of the white-labelled EMI services.
- Carefully review the terms and conditions of the white-labelled EMI. Pay attention to any clauses that may impact your ability to access funds, the terms of service, or the handling of disputes.
- Evaluate the customer support services provided by the white-labelled EMI. Clear communication channels and responsive support can be essential in addressing any concerns or issues.
- Inquire about the redundancy and contingency measures in place to ensure uninterrupted service. This includes back-up systems and plans for handling technical issues or disruptions.
Is it safe to use a white-labelled EMI?
Yes and no. There are many white labelled EMIs who are perfectly reputable and provide an excellent service. Even so, when it comes to international currency transactions, often involving considerable sums of money, whilst it isn’t necessarily riskier to use a white label service, make sure you undertake proper due diligence and, who, ultimately has control of your funds.
Assessing the factors mentioned above and thoroughly researching both the white-labelled service and the underlying provider can help you make an informed decision about whether the arrangement aligns with your risk tolerance and financial needs. If in doubt, then it’s probably best to steer clear and seek an alternative, proven provider.
Why would you use MFX for international payments?
First and foremost, we are NOT a white label brokerage.
MFX was established in 2014 and is a wholly owned subsidiary of the AIM-listed company financial services group (MFG) and a sister company of Conister Bank.
For any business or CSP on the Isle of Man requiring regular or intermittent cross-border money transfers, it makes sense to work with an organisation that has in-depth offshore knowledge. Since MFX is Isle of Man based, that’s a good starting point. Furthermore, our experienced, tight-knit team is multi-skilled in FX payments and cash management. But that is only part of the story…..
MFX is also a KEY PARTNER of Moneycorp, regarded as one of the world’s foremost international payment specialists. Whilst MFX will assist with all processing, client onboarding and day-to-day service, crucially, your funds will be held securely by Moneycorp and you will be assigned a client manager who will oversee all your transactions. These funds are safeguarded in segregated client accounts and kept separate from Moneycorp’s business accounts.
This tried and tested system is transparent, efficient and extremely cost-effective.
Above all it provides complete peace of mind for all international currency payments – unlike the financial uncertainty and risk that many are currently experiencing with white label EMIs.
To find out more about the services MFX can provide, to arrange a non-obligatory appointment, either call MFX directly on 01624 694722 or email