FINAL NOTICE

EMEA Exchange Limited
3rd Floor
6 Ingestre Place
London
W1F 0JJ

ACTION

1
By an application dated 22 June 2017 (“the Application”) EMEA Exchange Limited
(“EMEA”) applied under Regulation 12 of the Payment Services Regulations 2009
(“the PSRs”) for registration as a small payment institution and to perform the
following payment services:

(1)
Money Remittance

2
For the reasons listed below and pursuant to Regulation 12 of the PSRs, the Authority
has refused the Application.

SUMMARY OF REASONS

3
By its Warning Notice dated 6 December 2017 (“the Warning Notice”) issued
pursuant to Regulation 9(7) of the PSRs (as modified by Regulation 14), the
Authority gave notice that it proposed to refuse the Application and that EMEA was
entitled to make representations to the Authority about that proposed action.

4
As no representations have been received by the Authority from EMEA within the
time allowed by the Warning Notice, the default procedures in paragraph 2.3.2 of the
Authority’s Decision Procedure and Penalties Manual apply, permitting the Authority
to treat the matters referred to in its Warning Notice as undisputed.

5
By its Decision Notice dated 5 January 2018 ("the Decision Notice"), the Authority
gave EMEA notice that it had decided to take the action described above.

6
EMEA had 28 days from the date the Decision Notice was given to refer the matter to
the Upper Tribunal (formerly known as the Financial Services and Markets Tribunal).
No referral was made to the Upper Tribunal within this period of time or to date.

7
Under section 390(1) of the Act, the Authority, having decided to refuse the
Application and there having been no reference of that decision to the Tribunal, must
give EMEA Final Notice of its refusal.

8
The Authority decided to refuse the Application and to give this Final Notice as, on
the basis of the facts and matters described below, the Authority has concluded that
it cannot ensure that EMEA satisfies and will continue to satisfy the ‘Conditions for
registration as a small payment institution’ set out in Regulation 13 of the PSRs.

DEFINITIONS

9
The definitions below are used in this Final Notice.

“the PSRs” means the Payment Services Regulations 2009

“PSD” means the Payment Services Directive (2007/64/EC)

“PSD Agent” means a person who acts on behalf of an authorised payment institution
or a small payment institution in the provision of payment services

“the Act” means the Financial Services and Markets Act 2000 (as modified and
applied by the PSRs)

“the Authority” means the body corporate previously known as the Financial Services
Authority and renamed on 1 April 2013 as the Financial Conduct Authority

“the Application” means the application submitted by EMEA on 22 June 2017

“Mr Nwike” means Mr Martin Nwike, a director and 66.67% controller of EMEA

FACTS AND MATTERS

10 EMEA’s Application for Registration as a Small Payment Institution, made under the

PSRs, was received by the Authority on 18 July 2017.

11 During the review of the application, several background checks on Mr Nwike

revealed that he did not disclose on his PSD Individual form some facts that he
should have disclosed.

i.
Mr Nwike was a Director of a firm called EMEA Trade Limited. This firm traded as
a PSD Agent from June 2016 to January 2017. It was struck off the register at
Companies House on 27 December 2016.

ii. EMEA Trade Limited previously applied for registration as a Small Payment

Institution under application reference 0001313643 on 31 March 2016. The case
officer, Judit Kocsis, indicated that Mr Nwike did not appear to meet the
conditions of registration, after which EMEA Trade Limited, on 4 May 2016 at the
request of Mr Nwike, withdrew its application.

12 The Authority sent an email to Mr Nwike on 6 September 2017, requesting that Mr

Nwike review the disclosures submitted with his application.

13 Mr Nwike sent the Authority an email on 8 September, confirming that all the

information was accurate.

14 A Minded to Refuse letter was sent to EMEA on 17 October 2017.

15 Mr Nwike sent his response to the Authority’s letter by email on 25 October 2017.

Within his response, Mr Nwike disputes the reasons for refusal set out in the
Authority’s letter of 17 October 2017.

CONCLUSIONS

16 Pursuant to Regulation 13(1) of the PSRs the Authority may refuse an application for

registration as a small payment institution only if any of the conditions in paragraphs
(2) – (6) of Regulation 13 are not met. The Regulations and Authority guidance
relevant to this Warning Notice are referred to in Annex A.

17 The Authority is of the view that Regulation(s) 13(4A) and 13(4B) are not met, for

the reasons set out below.

18 The Authority places considerable importance on receiving accurate and complete

information. Mr Nwike has failed to disclose material facts in the application form
which would have been relevant to the assessment of the application form.

19 In particular, the Authority considers that the non-disclosure of the previously

withdrawn application means that the Authority cannot be satisfied that Mr Nwike
completed the form honestly, a fact which is relevant to the assessment of Mr
Nwike’s fitness and reputation. In addition, Mr Nwike failed to tell the FCA that EMEA
Trade Limited had been struck off the register at Companies House. He also told the
FCA, in his email of 25 October 2017, that EMEA Trade Limited had never traded,
when in his application form he had clearly stated that it had traded as a PSD Agent.
As such, the Authority cannot be satisfied that Mr Nwike has corresponded with it
openly and honestly.

20 The Authority considers that non-disclosure of these facts and the circumstances in

which the failure to disclose occurred, means that the applicant has not satisfied the
Authority that Mr Nwike is a fit and proper person or of good repute as required by
regulation 13(4A) and regulation 13(4B).

IMPORTANT NOTICES

21 This Final Notice is given to EMEA pursuant to Schedule 5 Part 1 (7) of the PSRs

(which incorporates section 390(1) of the Act).

22 Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of information

about the matter to which this Final Notice relates. Under those provisions, the
Authority must publish such information about the matter to which this Final Notice
relates as the Authority considers appropriate. The information may be published in
such manner as the Authority considers appropriate. However, the Authority may not
publish information if such publication would, in the opinion of the Authority, be
unfair to EMEA or prejudicial to the interests of consumers or detrimental to the
stability of the UK financial system.

23 The Authority intends to publish such information about the matter to which this Final

Notice relates as it considers appropriate.

Authority contacts

24 For more information concerning this matter generally, contact David Blocksidge,

Manager, Retail Authorisations at the Authority (direct line: 020 7066 2524/ email:
david.blocksidge@fca.org.uk).

David Fisher
Chair of the Regulatory Transactions Committee

ANNEX A – REGULATORY PROVISIONS RELEVANT TO THIS FINAL NOTICE

The Payment Services Regulations 2009

1
Regulation 9(2) of the PSRs (as applied by regulation 14 to applications for
registration as an SPI) provides that the Authority may determine an incomplete
application if it considers it appropriate to do so, and it must in any event determine
any such application within 12 months beginning with the date on which it received
the application.

2
Regulation 12(1) requires an application for registration as a small payment
institution to contain, or be accompanied by, the information required by the
Authority.

3
Regulation 12(4) states that at any time after receiving an application and before
determining it, the Authority may require the applicant to provide it with such further
information as it reasonably considers necessary to enable it to determine the
application.

4
Regulation 13(1) states that the Authority may refuse to register an applicant as a
small payment institution only if any of the conditions set out in paragraphs (2) to
(6) are not met.

5
Regulation 13(4A) states that where the applicant is a partnership, an unincorporated
association or a body corporate, the applicant must satisfy the Authority that any
persons having a qualifying holding in it are fit and proper persons having regard to
the need to ensure the sound and prudent conduct of the affairs of a small payment
institution.

6
Regulation 13(4B) states that the applicant must satisfy the Authority that:

a. where the applicant is a body corporate, the directors;

b. the persons responsible for the management of the institution; and

c. where relevant, the persons responsible for the management of payment services,

are of good repute and possess appropriate knowledge and experience to provide
payment services.

7
Schedule 5, Part 1 (7) states that Part 26 of the Act applies with the modifications
detailed.

The Act (i.e. the Financial Services and Markets Act 2000)

8
Part 26 section 390(1) states that if the Authority has given a person a Decision
Notice and the matter was not referred to a Tribunal within the time required by the
Tribunal Procedure Rules, the Authority must give the person concerned a Final
Notice.

9
Part 26 section 391(4) states that the Authority must publish such information about
the matter to which a Final Notice relates as it considers appropriate.

10 Part 26 section 391(6) states that the Authority may not publish information if

publication would, in its opinion, be unfair to the person with respect to whom the
action was taken or prejudicial to the interests of consumers.

11 Part 26 section 391(7) states that information is to be published in such a manner as

the Authority considers appropriate.

“The Authority’s role under the Payment Services Regulations 2009 – Our
approach”

12 In exercising its powers in relation to the approval of an application for registration

as a small payment institution, the Authority must have regard to guidance published
in the Authority’s ‘Our approach’ document, including the section titled ‘Authorisation
and registration’. The version of the ‘Our approach’ document current at the date of
the application was dated June 2013.

13 The paragraphs relevant to the refusal of the Application are set out below.

14 Paragraph 3.94: We may refuse to register an applicant as a small payment

institution where any of the following conditions is not met:


The projected average monthly payment transactions to be carried out by the
applicant (including by agents on its behalf) must not exceed €3 million.


None of the individuals responsible for the management or operation of the
business has been convicted of offences relating to money laundering or terrorist
financing or other financial crimes.


Where the applicant is a partnership, an unincorporated association or a body
corporate, the applicant must satisfy us that any persons having a qualifying
holding in it are fit and proper persons, having regard to the need to ensure the
sound and prudent conduct of the affairs of a small PI.


The applicant must satisfy us that its directors and/or any persons responsible for
the management of the small PI, and where relevant the persons responsible for
the management of its payment services, are of good repute and possess
appropriate knowledge and experience to provide payment services.


Where the applicant is a body corporate that has close links with another person
(‘CL’) the applicant must satisfy us that those links are not likely to prevent our
effective supervision of the applicant. If it appears to us that the CL is subject to
the laws, regulations or administrative provisions of a territory outside of the EEA,
the applicant must satisfy us that neither those foreign laws/provisions, would
prevent our effective supervision of the applicant.


The applicant’s head office, registered office or place of residence, as the case
may be, must be in the UK. This means that the applicant’s head office and, if it
has one, registered office must be in the UK. If the applicant is a natural person
their place of residence must be in the UK.


The applicant must comply with the registration requirements of the MLR, where
those requirements apply to it.

15 Paragraph 3.104: states that the applicant must satisfy us that any persons having a

qualifying holding in it are fit and proper persons having regard to the need to ensure
the sound and prudent conduct of the affairs of the small PI. This comprises two
elements: first, the applicant will need to assess whether any persons (or entities)
have a qualifying holding in it and notify us of the identity of such persons; secondly,
we will undertake an assessment of the fitness and propriety of any such persons (or
entities).

16 Paragraph 3.110: states that The term ‘fit and proper’, which is used in regulation

13(4A), incorporates the following essential factors:

a. honesty, integrity and reputation;

b. competence and capability; and

c. financial soundness

of the person with a qualifying holding taking into account the need to ensure the
sound and prudent management of a small PI.

17 Paragraph 3.111: which gives examples of the facts the Authority would consider

when assessing the fitness and propriety of a controller.

18 Paragraph 3.118: which states that the Authority will assess the fitness and propriety

of an individual on the information provided in the application form and other
information available to us from our own and external sources. We may ask for more
information if required. We attach considerable importance to the completeness and
accuracy of the PSD Individual form. If the applicant is in any doubt about whether or
not any information is relevant, it should be included.

19 Paragraph 3.119: which states the Authority consider the term ‘of good repute’ to

include the essential factors relating to fitness and propriety set out above in relation
to controllers.

20 Paragraph 3.124: which states The factors that we will have regard to when making

the fit and proper assessment are:

a. honesty, integrity and reputation;

b. competence and capability; and

c. financial soundness.

21 Paragraph 3.126: which states the factors that the Authority would consider in the

assessment of the fitness and propriety of a PSD Individual.

22 Paragraph 3.129: which states If a firm is not sure whether something may have an

impact on an individual’s fitness and propriety, the information should be disclosed.
The non-disclosure of material facts is taken very seriously by us as it is seen as
evidence of current dishonesty. If in doubt, disclose.

23 Paragraphs 3.130 and 3.131: which states that in determining an individual’s

competence, capability and experience, we will have regard to whether the individual
has the knowledge, experience and training to be able to provide payment services.

The level of experience, knowledge and training should be proportionate to the
nature, complexity and scale of risk inherent in the business activity of the firm.

24 Paragraph 3.150: which states that the Authority can refuse an application when the

information and evidence provided does not satisfy the requirements of the PSRs.
When this happens we are required to give the applicant a warning notice setting out
the reason for refusing the application and allowing 28 days to make a representation
on the decision.