Digital banking startup Mercury confirmed it is no longer serving customers in specific countries, including Ukraine. This decision comes after Mercury faced federal scrutiny through its partner, Choice Bank, over allowing foreign companies to open accounts.
Federal Scrutiny and Compliance Mercury
The FDIC expressed concerns that Choice had opened Mercury accounts in legally risky countries. The scrutiny led Mercury to invest in its risk and compliance teams.
Impact on Ukrainian Founders
Notably, Ukraine is now on Mercury’s will-not-support list, affecting founders living in the country. Mercury clarified that this change applies only to founders residing in Ukraine, not those living in the U.S. with a Ukrainian passport.
Concerns and Reactions
Ukrainian founder Alyona Mysko expressed concern that Mercury’s actions might indicate a broader issue in the banking system, where Ukraine is not differentiated from Russia. The FDIC did not provide specific comments on its guidance regarding Ukraine.
Mercury’s Explanation and Future Revisions
Mercury cited the complexity of supporting Ukraine due to U.S. sanctions programs for the policy change. Although Ukraine is not comprehensively sanctioned, several regions are, making compliance increasingly challenging. Promised to revisit this policy in the future.
Nigerian Founders Also Affected
In addition to Ukraine, founders from Nigeria and Croatia have also been impacted by Mercury’s policy update. Mercury’s policy affects countries on the Financial Action Task Force (FATF) “grey list,” which includes Nigeria and Croatia.
Mercury Industry Reactions and Alternatives
African fintechs like Raenest, Verto, and Leatherback are seizing the opportunity to accommodate affected customers. Meanwhile, Geek Ventures managing partner Ihar Mahaniok advised founders to open accounts with more reliable banks. Competitor Brex assists Ukrainian founders with special sign-up bonuses for those affected by Mercury’s policy changes.
Conclusion(Mercury)
Mercury’s decision to cut services in certain countries reflects its ongoing efforts to meet compliance standards amidst federal scrutiny. However, this move has raised concerns among affected founders and highlights digital banking startups’ challenges in navigating complex international regulations.
