The UK's first Internet offshore bank has collapsed, only nine months after the Bank of England issued warnings about the lack of protection for investors in the Antigua-based institution.
The government of Antigua issued an alert after staff at the European Union Bank (EUB) were laid off and the banks' founders disappeared last week - apparently with the bank's funds.
The EUB billed itself last year as the UK's first Internet bank, and claimed investors could benefit from the speed and simplicity of carrying out all their transactions over the Net.
But last October, the Bank of England issued a warning to UK investors to check carefully what protection the bank and its home country offered for their money, after the bank began advertising its services on the Internet.
"The Bank recommends that depositors conduct due diligence on all names before using the Internet for banking and, more generally, depositing money with entities offshore," said a Bank spokesperson this week.
As with any offshore account, the Bank of England has no jurisdiction over an Internet bank not based in the UK. The Bank had investigated whether the EUB was breaking bank advertising regulations but concluded there was little it could do to prevent it.
However,the spokesperson said today that, despite the collapse of EUB, the Bank did not wish to discourage use of Internet banking generally.
"The great majority of Internet usage for banking services does not cause concern to the Bank as supervisor, but of course there can be exceptions," she said.
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