- Due to compliance issues, Mercury has ceased services for startups in Ukraine, Nigeria, and other regions.
- Ukrainian founders in the U.S. remain supported, while those in Ukraine are affected.
- Nigerian startups face similar restrictions, raising concerns about broader banking industry practices.
Digital banking startup Mercury has abruptly stopped providing services to customers in certain countries, including Ukraine and Nigeria.
This decision follows federal scrutiny related to its partner, Choice Bank, and its practice of allowing foreign companies to open accounts.
Earlier this year, Mercury was spotlighted when the FDIC expressed concerns over Choice Bank’s handling of Mercury accounts in legally risky countries.
The FDIC’s worries included overseas customers using questionable methods to prove a U.S. presence.
In response, Mercury stated in April that it was enhancing its risk and compliance teams.
As part of this effort, Mercury recently updated its eligibility requirements, notifying certain customers that it could no longer support them based on their provided addresses or frequent account activity locations.
The company confirmed that this policy change impacts several countries, including Ukraine, Nigeria, and Croatia.
Mercury’s updated policy notably affects Ukrainian founders living in Ukraine, although those with Ukrainian passports residing in the U.S. remain supported.
This clarification came after Ukrainian founder Alyona Mysko, CEO of Fuelfinance, reported that her company’s account was closed due to her Ukrainian passport.
Mercury admitted to initially communicating an error, clarifying that only companies with founders located in Ukraine are affected.
The FDIC, while not directly overseeing fintechs like Mercury, did not clarify if its guidance on Ukraine had changed. Mercury explained that supporting Ukraine has become too complex due to current U.S. sanctions programs.
Although Ukraine is not comprehensively sanctioned, certain regions are, complicating compliance efforts.
Mysko, expressing concern over the situation, highlighted a broader issue where banks might not differentiate between Ukraine and Russia. She reached out to Mercury CEO Immad Akhund but was informed that her company would not be reinstated.
Mercury co-founder Jason Zhang acknowledged the unfairness but maintained that supporting Ukrainian founders in Ukraine is currently unfeasible due to compliance challenges.
Mercury’s policy also impacts Nigerian founders living in the U.S. Two anonymous Nigerian founders shared that their accounts would be closed within 30 days, despite their startups being based in the U.S. Mercury’s policy adjustments appear to be influenced by the Financial Action Task Force (FATF) “grey list,” which includes Nigeria and other affected countries due to deficiencies in countering money laundering and terrorist financing.
Benjamin Dada, a fintech partnerships expert from Nigeria, criticized Mercury’s broad approach, emphasizing that not all customers from Nigeria pose the same risk as those from countries like Iran or North Korea.
He pointed out that Mercury’s lack of robust compliance infrastructure might be leading to these sweeping customer base reductions.
In the wake of these developments, other fintech companies like Raenest, Verto, and Leatherback are poised to attract the affected customers.
Raenest co-founder Richard Oyome emphasized that their approach to compliance and partnerships has always considered Africa from the outset, unlike Mercury’s more reactive measures.
Geek Ventures managing partner Ihar Mahaniok advised founders to secure alternative banking options, expressing doubts about Mercury’s reliability. Mercury’s response reiterated their compliance challenges and the need for policy changes.
