Supervisory Notice
On , the Financial Conduct Authority issued a Supervisory Notice to Motmaen Limited
FIRST SUPERVISORY NOTICE
1
ACTION
1.1 For the reasons given in this First Supervisory Notice (“FSN”), and pursuant to
regulations 12(1) and 15 of the Payment Services Regulations 2017 (“the PSR”), the
Financial Conduct Authority (“the Authority”) has decided to vary the registration
granted to Motmaen Limited (“the Firm”) pursuant to Part 2 of the PSR by:
1)
Removing the following payment service the Firm provides:
a)
Money remittance; and
2)
Imposing the following requirements (“the Requirements”) on the Firm with
immediate effect:
Restriction on new payment service users
a)
The Firm must not onboard or register any new payment service users
(“PSUs”) or agents.
Payment of liabilities
b)
By 4pm 22 May 2024, the Firm must pay all liabilities owed to any
existing PSUs. Unless instructed otherwise by the relevant PSU, the Firm
must make the payment to the same payment account the PSU (or a
third party on the PSU’s behalf) used to transfer the funds to the Firm.
Retention and notification requirements
c)
The Firm must by 4pm 22 May 2024 notify all PSUs, customers and
agents in writing that it has ceased providing payment services and of
the imposition and effect of the Requirements in a form to be agreed in
advance with the Authority.
d)
If the Firm has a website it must, by 4pm 22 May 2024, publish in a
prominent place on its website a notice setting out that it has ceased
providing payment services and of the imposition and effect of the
Requirements in a form to be agreed in advance with the Authority.
e)
The Firm must provide to the Authority in writing by 4pm 22 May 2024:
i.
Confirmation that it has ceased providing payment services;
ii.
Confirmation that it is in compliance with these Requirements; and
iii.
A statement to evidence the payment of liabilities to PSUs.
f)
The Firm must secure and preserve all records and/or information
(physical or electronic) relating to payment services in their original
form, or in a copy provide to be identical to the source material. These
must be retained in a form and at a location within the United Kingdom,
to be notified to the Authority in writing by 4pm 22 May 2024, such that
they can be provided to the Authority, or to a person named by the
Authority, promptly on its request.
g)
By 4pm 22 May 2024, the Firm must update its details displayed on the
Authority’s Register using Connect. This must include, but not be limited
to all addresses, telephone numbers, email addresses and complaint
contact details.
1.2 The effect of the removal of the payment service in accordance with paragraph 1.1(1)
is that the Firm cannot provide any payment services.
1.3 The variation shall take immediate effect and remain in force unless and until varied
or cancelled by the Authority (either on the application of the Firm or of the
Authority’s own volition).
2
REASONS FOR ACTION
2.1 The Authority has concluded, on the basis of the facts and matters described below,
that it is necessary to vary the Firm’s registration by removing the payment services
it provides and imposing the Requirements because it appears that:
1) Pursuant to regulation 12(1)(a) of the PSR, the Firm no longer meets, or it is
unlikely to meet, the conditions for registration in regulation 14(11), because
HMRC cancelled the Firm’s registration on HMRC’s Supervised Register for
Business (“the Supervised Business Register”) and the Firm has not been on the
Supervised Business Register since 11 September 2023. In addition, the Firm did
not inform the Authority that HMRC had cancelled its registration, which is a
major change in circumstance that it should have informed the Authority of
pursuant to regulation 37;
2) Pursuant to regulation 12(1)(e) of the PSR, the Firm’s provision of payment
services is unlawful because HMRC cancelled the Firm’s registration on the
Supervised Business Register; and/or
3) Pursuant to regulation 12(1)(d) of the PSR, it is desirable in order to protect the
interests of consumers because the Firm is not engaging with the Authority in an
open and cooperative and had not disclosed to the Authority information relating
to it which the Authority would reasonably expect notice of, such that it may have
failed to comply with Principle 11 (Regulations with regulators) because it
appears it has:
a) provided payment services despite being made aware that it was unlawful
to do so and despite being made aware that it was not meeting its conditions
for registration as a small payment institution (“SPI”); and
b) failed to respond to the Authority’s repeated communications relating to the
action by HMRC.
The Firm’s actions to date cast serious doubt as to its ability and willingness to
observe regulatory requirements and demonstrate that it poses a significant risk
of harm to consumers.
3
DEFINITIONS
3.1 The definitions below are used in this FSN:
“Act” means the Financial Services and Markets Act 2000;
“Authority” means the Financial Conduct Authority;
“the Firm” means Motmaen Limited;
“Financial Services Register” means the public record maintained by the Authority;
“FSN” means First Supervisory Notice;
“HMRC” means HM Revenue and Customs;
“LBA” means Letter Before Action;
“MLR” means the Money Laundering, Terrorist Financing and Transfer of Funds
(Information on the Payer) Regulations 2017;
“Money remittance” means a service for the transmission of money (or any
representation of monetary value), without any payment accounts being created in
the name of the payer or the payee, where (a) funds are received from a payer for
the sole purpose of transferring a corresponding amount to a payee or to another
payment service provider acting on behalf of the payee, or (b) funds are received on
behalf of, and made available to, the payee;
“Money service business” means an undertaking which by way of business operates
a currency exchange office, transmits money (or any representation of monetary
value) by any means or cashes cheques which are made payable to customers;
“PSR” means the Payment Services Regulations 2017;
“PSU” means payment service user;
“Requirements” means the terms imposed on the Firm by this First Supervisory
Notice as outlined in section 1 above;
“SPI” means a small payment institution registered pursuant to regulation 14 of the
PSR and included by the Authority in the Financial Services Register pursuant to
regulation 4(1)(b) of the PSR;
“Supervised Business Register” means the Supervised Business Register maintained
by HMRC under the MLR;
“Tribunal” means the Upper Tribunal (Tax and Chancery Chamber).
4
FACTS AND MATTERS
4.1 The Firm was incorporated on 10 January 2007. The Firm was first registered as an
SPI on 13 November 2014 under the Payment Services Regulations 2009. The Firm
was re-registered as an SPI on 2 January 2019 under the PSR. The sole payment
service it is registered to provide is money remittance.
4.2 The conditions of registration in the PSR require the Firm to be included in the
Supervised Business Register (regulation 14(11)). HMRC is a supervisory body under
the MLR for certain firms, including a money service business such as the Firm
(regulation 7(1)). Paragraph 56(1) of the MLR provides that a person must not act
as a money service business unless it is included in the appropriate register.
4.3 The Firm was registered with HMRC as a money service business on 1 March 2018.
4.4 On 11 August 2023, HMRC issued a Notice of Cancellation of Registration (the
“Notice”) to the Firm informing it of HMRC’s decision to cancel its HMRC registration
effective from 11 September 2023 pursuant to regulation 60(1)(a) and 60(3)(a) of
the MLR.
4.5 The Notice informed the Firm that it must cease carrying out relevant activity by 11
September 2023, and that the Firm may be subject to further civil sanctions including
financial penalties and/or prosecution if it trades as a money service business from
that date.
4.6 The cancellation was effective from 11 September 2023, and it was unlawful for the
Firm to act as a money service business (and therefore provide payment services)
from that date. The Firm is not currently registered with HMRC as a money service
business.
4.7 As an SPI, the Firm is required by regulation 37(1)(b) of the PSR to provide details
of a significant change in circumstances which is relevant to its fulfilment of the
conditions for registration. An SPI’s registration on the Supervised Business Register
is relevant to the fulfilment of the conditions for registration under regulation 14(11)
of the PSR. The Firm did not inform the Authority that its HMRC registration had been
cancelled and has not, despite the issue being raised in correspondence by the
Authority since 19 October 2023, provided any detail to the Authority as to the action
nor the surrounding circumstances.
4.8 On 19 October 2023, the Authority wrote to the Firm by email stating that it was
aware that its registration had been cancelled by HMRC, and that the Firm was unable
to meet its condition for registration as an SPI under regulation 14(11) of the PSR
as a result. The Authority invited the Firm to sign an undertaking, which included
that the Firm should refrain from providing payment services and pay all liabilities
owed to relevant PSUs as soon as possible.
4.9 The Authority asked the Firm for a response by 26 October 2023. As the Firm did
not respond by that date, the Authority sent a further email to the Firm on 1
November 2023 asking for acknowledgment of receipt and a response in respect of
the undertaking by 8 November 2023.
4.10 As the Authority did not receive any response from the Firm to those emails, the
Authority sent a further email on 30 November 2023 reminding the Firm of its
obligations under Principle 11 (Relations with regulators) of the Principles for
Businesses to deal with the Authority in an open and cooperative way. It stated that
if the Firm did not respond by 7 December 2023, the Authority may consider using
its supervisory powers to ensure that the Firm does not provide payment services
whilst not meeting its conditions for registration.
4.11 On 10 January 2024, the Authority sought to contact the Firm via telephone, and
subsequently followed this with a further email requesting a response to the earlier
correspondence.
4.12 The Authority did not receive any response from the Firm in response to these
communications, nor any information relating to the action taken against the Firm
by HMRC.
4.13 Between January and April 2024, the Authority engaged with the Firm regarding
its concerns that the Firm had not submitted certain regulatory returns. On 19
January 2024, the Authority sent an email to the Firm stating that it appeared from
the Authority’s systems that the Firm was not providing payment services and that
the Authority would, therefore, commence enforcement action if the Firm did not
apply to cancel its registration.
4.14 On 20 January 2024, the Firm responded by email stating “my firm is still providing
payment services as usual.” In the same email, the Firm also stated that it had paid
the “annual fee” to the Authority on 4 September 2023 and purported to provide
evidence of this. The Firm did not, however, submit at this point the relevant
regulatory returns, nor did it provide any evidence to demonstrate that it was
providing payment services, or evidence as to the extent of any such activity.
4.15 On 8 February 2024, the Authority sent the firm a first Letter Before Action (“LBA”),
which noted that the Firm had failed to submit the required regulatory returns and
that the Firm had not provided any evidence that it was undertaking payment
services. The first LBA stated that, absent the Firm submitting the required returns
and providing this evidence or the Firm applying to cancel its registration by 22
February 2024, the Authority would proceed to recommend to a decision-maker
that the Firm’s registration as a SPI should be cancelled.
4.16 On 20 February 2024, the Firm responded to the first LBA stating that it would
provide the “requested information” by 22 February 2024.
4.17 On 8 April 2024, having not received a response from the Firm since its email on
20 February 2024, the Authority sent a second LBA to the Firm. The second LBA
referred to the first LBA and the earlier correspondence with the Firm, but also
explained that the Authority had been notified that the Firm’s registration on the
Supervised Business Register had been cancelled by HMRC on 11 September 2023.
The second LBA noted that, in addition the continued failure to submit regulatory
returns, the fact that the Firm had stated that it was continuing to provide payment
services after the point at which the Firm’s HMRC registration had been cancelled
meant that it appeared to be providing payment services unlawfully.
4.18 The Firm submitted three outstanding regulatory returns on 11 April 2024. On 14
April 2024, the Firm emailed the Authority regarding its returns: it did not, however,
address the Authority’s other concerns. The Firm’s email apologised for the delay in
submitting the relevant regulatory returns and cited certain issues with submitting
other outstanding regulatory returns. The email from the Firm made no reference to
the fact that the Firm’s registration on the Supervised Business Register had been
cancelled by HMRC nor reference to the Authority’s communications which had
explained that continued provision of payment services by the Firm despite the de-
registration by HMRC was unlawful. The Authority has serious concerns that the Firm
is, as a result of its assertions relating to its ongoing activity, continuing to provide
payment services, despite also being aware of the Authority’s concerns in this regard.
4.19 The Authority has not received any further communications from the Firm. The
Firm has not, as at the date of this Notice, applied to cancel its registration as an
SPI.
Failings and risks identified
Conditions for registration
4.20 The Authority has serious concerns that the Firm does not appear to be meeting
the conditions for registration as an SPI under regulation 14(11) of the PSR because
the Firm has not been included on the Supervised Business Register since 11
September 2023.
4.21 The Firm has not informed the Authority that HMRC had cancelled its registration.
The Authority considers that the cancellation is a significant change in circumstances
in respect of the Firm’s conditions for registration as an SPI under regulations 14(11)
and 37(1)(b) of the PSR, and that the Firm should have informed the Authority of
this. The Firm has also failed to respond to the Authority’s various communications,
sent to the Firm from 19 October 2023 onwards, regarding this specific issue and
failed to provide any detail relating to the significant change in circumstances
(including any detail on the circumstances regarding HMRC’s action). The Authority
is therefore very concerned that the Firm has failed to be open and cooperative and
failed to disclose to the Authority appropriately anything relating to the Firm of which
the Authority would reasonably expect notice.
4.22 On the basis of the facts and matters set out, the Authority considers that it is
desirable to exercise the power under regulation 12(1)(a) of the PSR.
Unlawful provision of payment services
4.23 It is unlawful for the Firm to provide payment services because HMRC cancelled its
registration under regulation 60 of the MLR on 11 September 2023.
4.24 The Authority has serious concerns that the Firm has been providing payment
services unlawfully since 11 September 2023 because HMRC cancelled its registration
under regulation 60 of the MLR effective 11 September 2023.
4.25 The Firm informed the Authority on 20 January 2024 that it is continuing to provide
payment services. The Firm has not, in response to subsequent correspondence from
the Authority, informed the Authority that it has ceased to do so or applied to cancel
its registration as an SPI.
4.26 On the basis of the facts and matters set out, the Authority considers that it is
desirable to exercise the power under regulation 12(1)(e) of the PSR.
Consumer protection
4.27 The Authority has serious concerns that the Firm may expose consumers to the
risk of significant harm. The Firm is not engaging with the Authority in an open and
cooperative manner and has not disclosed to the Authority information relating to it
which the Authority would reasonably expect notice, such that it may have failed to
comply with Principle 11 (Relations with regulators) because it has:
a)
Continued to provide payment services after 11 September 2023 when it knew
from 11 August 2023 that it was unlawful to trade as a money service business
(and therefore provide payment services) and knew, from at least 19 October
2023, that it was not meeting its conditions for registration as an SPI; and
b)
Failed to respond to the Authority’s repeated communications relating to the
action by HMRC.
4.28 The Firm’s actions to date cast serious doubt as to its ability and willingness to
observe regulatory requirements and demonstrate that it poses a significant risk of
harm to consumers.
4.29 On the basis of the facts and matters set out, it appears to the Authority that it is
desirable to exercise the power under regulation 12(1)(d) of the PSR.
5
CONCLUSION
5.1 The regulatory provisions relevant to this First Supervisory Notice are set out in the
Annex.
Analysis of failings and risks
5.2 The Authority has concluded, in light of the matters set out above, that it is necessary
to exercise its own-initiative power to vary the Firm’s registration because the Firm
is not meeting the conditions for registration and a variation is desirable in order to
protect the interests of consumers. The Authority has concluded that it is necessary
to vary the firm’s registration by:
1) removing its money remittance payment service; and
2) imposing the Requirements.
5.3 The Authority considers that variation of the Firm’s registration by removing its
payment service and imposing the Requirements are a proportionate and appropriate
means to address the current and immediate risks and that this action is desirable
to protect the interests of consumers, in accordance with regulation 12(1)(d) of the
PSR.
Timing and duration of the Requirements
5.4 It is necessary to vary the Firm’s registration by removing its payment service and
imposing the Requirements immediately given the seriousness of the risks and the
need to protect consumers’ interests.
5.5 The Authority considers that it is necessary for the variation to remain in place
indefinitely or until such time as the Authority considers it appropriate for the
variation and/or Requirements to be lifted.
6
PROCEDURAL MATTERS
Decision maker
6.1 The decision which gave rise to the obligation to give this First Supervisory Notice
was made by an Authority staff member under executive procedures according to
DEPP 2.3.7G and DEPP 4.1.7G.
6.2 This First Supervisory Notice is given to the Firm under regulation 12(6) of the PSR
and in accordance with regulation 12(7) of the PSR.
6.3 The following statutory rights are important.
Representations
6.4 The Firm has the right to make written representations to the Authority (regardless
of whether it refers this matter to the Tribunal). The Firm may also request to make
oral representations, but the Authority will only consider this in exceptional
circumstances according to DEPP 2.3.1AG. The deadline for providing written
representations and notifying the Authority that the Firm wishes to make oral
representations is 03 June 2024 or such later date as may be permitted by the
Authority. Any notification or representations should be sent to the Decision-Making
Secretariat (EDMCaseInbox@fca.org.uk).
The Tribunal
6.5 The Firm has the right to refer the matter to which this First Supervisory Notice
relates to the Tribunal. The Tax and Chancery Chamber is the part of the Tribunal
which, amongst other things, hears references arising from decisions of the
Authority. Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper
Tribunal) Rules 2008, the Firm has 28 days from the date on which this First
Supervisory Notice is given to it to refer the matter to the Tribunal.
6.6 A reference to the Tribunal can be made by way of a reference notice (Form FTC3)
signed by or on behalf of the Firm and filed with a copy of this First Supervisory
Notice. The Tribunal’s contact details are: Upper Tribunal (Tax and Chancery
Chamber), 5th Floor, Rolls Building, Fetter Lane, London EC4A 1NL (telephone: 020
7612 9700; email: uttc@justice.gov.uk)
6.7 Further information on the Tribunal, including guidance and the relevant forms to
complete, can be found on the HM Courts and Tribunal Service website:
https://www.gov.uk/government/collections/upper-tribunal-tax-and-chancery-
chamber-
6.8 The Firm should note that a copy of the reference notice (Form FTC3) must also be
sent to the Authority at the same time as a reference is filed with the Tribunal. A
copy of the reference notice should be sent to the Decision-Making Secretariat
(EDMCaseInbox@fca.org.uk).
Confidentiality and publicity
6.9 The Firm should note that this First Supervisory Notice may contain confidential
information and should not be disclosed to a third party (except for the purpose of
obtaining legal advice on its contents).
6.10 The Firm should note that section 391(5) of the Act, as applied by paragraph 10 of
Schedule 6 of the PSR, requires the Authority, when this First Supervisory Notice
takes effect (and this First Supervisory Notice takes immediate effect), to publish
such information about the matter to which the notice relates as it considers
appropriate.
Authority contacts
6.11 Any questions regarding the executive procedures decision-making process should
be directed to the Decision-Making Secretariat (EDMCaseInbox@fca.org.uk).
Decision made under Executive Procedures
Director, Payments & Digital Assets
RELEVANT STATUTORY PROVISIONS
1. Regulation 7(1) of the PSR provides that the Authority may include in the
authorisation of an authorised payment institution such requirements as it
considers appropriate. Regulation 7(2) of the PSR provides that a requirement may
be imposed to require the person concerned to: 1) take a specified action, or 2) to
refrain from taking a specified action.
2. Regulation 8 of the PSR provides that the Authority may, on the application of an
authorised payment institution, vary that person’s authorisation. Regulation 8(b)
permits the Authority to remove a payment service from those for which it has
granted authorisation. Regulation 8(c) permits the Authority to impose a
requirement such as may, under regulation 7 of the PSR, be included in an
authorisation provided that the Authority is satisfied that the conditions set out in
regulations 6(4) to (9) and regulation 22(1) are being or likely to be met.
3. Regulation 12(1) of the PSR provides that the Authority may vary the authorisation
of an authorised payment institution in any of the ways mentioned in regulation 8
if it appears to the Authority that:
“[…]
(a) The person no longer meets, or is unlikely to continue to meet, any of the
conditions set out in regulation 6(4) to (9) or the requirement in regulation 22(1)
to maintain own funds.
(c) The person would constitute a threat to the stability of a payment system by
continuing to provide a particular payment service or payment services.
(d) The variation is desirable in order to protect the interests of consumers.”
4. Regulation 12(2) of the PSR provides that a variation takes effect immediately if
the notice given under paragraph (6) states that this is the case, or on such date
as may be specified. Regulation 12(3) of the PSR provides that a variation may be
expressed to take effect immediately or on a specified date only if the Authority,
having regard to the ground on which it is exercising the power under paragraph
(1), reasonably considers that it is necessary for the variation to take effect
immediately or, as the case may be, on that date.
5. Regulation 12(6) of the PSR provides that, where the Authority proposes to vary a
person’s authorisation, it must give the person notice.
6. Regulation 14 of the PSR provides the conditions for registration as a small payment
institution, including the condition under regulation 14(11) that the applicant must
comply with a requirement of the MLR to be included in a register maintained under
those Regulations where such a requirement applies to the applicant.
7. Regulation 15 of the PSR provides that regulations 7 to 12 apply to the registration
of a small payment institution as they apply to the authorisation as a payment
institution as if:
(a) references to authorisation were references to registration;
(c) in regulation 8 […]—
(i) for “an authorised payment institution” there were substituted “small payment
institution”; and
(ii) for “provided that” to the end there were substituted—
“provided that the FCA is satisfied that the conditions set out in regulation 14(4) to
(11) are being or are likely to be met and that the monthly average over any period
of 12 months of the total amount of payment transactions executed by the
institution, including any of its agents in the United Kingdom, continues not to
exceed 3 million euros (“the financial limit”).”;
(e) in regulation 12 […] for sub-paragraph (a) there were substituted—
“(a) the person does not meet, or is unlikely to meet, any of the conditions set out
in regulation 14(4) to (11) or the financial limit referred to in regulation 8.”
8. Section 391 of the Act, as applied in modified form by paragraph 10 of Schedule 6
to the PSR, provides that:
(5)
When a supervisory notice takes effect, the Authority must publish such
information about the matter to which the notice relates as it considers appropriate.
(6)
The Authority may not publish information under this section if, in its
opinion, publication of the information would be:
(a) unfair to the person with respect to whom the action was taken (or was
proposed to be taken),
(b) prejudicial to the interests of consumers, or
(c) detrimental to the stability of the UK financial system
(7)
Information is to be published under this section in such manner as
the Authority considers appropriate.”
Relevant Regulatory provisions
9. The Authority's approach in relation to its own-initiative powers is set out in the
Enforcement Guide (“EG”), certain provisions of which are summarised below.
10. EG 19.20 outlines the Authority’s policy in respect of the use of its powers under
the PSR. EG 19.20.5 provides that the PSR, for the most part, mirror the Authority’s
investigative, sanctioning and regulatory powers under the Act and that the
Authority has decided to adopt procedures and policies in relation to the use of
those powers akin to those it has under the Act.
11. The Authority considers that the powers under regulation 12(1) of the PSR are
similar to those under sections 55J and 55L of the Act and that the provisions of
EG 8 “Variation and cancellation of permission and imposition of requirements on
the Authority’s own-initiative and intervention against incoming firms” are
applicable.
12. EG 8.2.1 states that the Authority will have regard to its statutory objectives and
the range of regulatory tools that are available to it when it considers how it should
deal with a concern about a firm. It will also have regard to: 1) the responsibilities
of a firm’s management to deal with concerns about the firm or about the way its
business is being or has been run; and 2) the principle that a restriction imposed
on a firm should be proportionate to the objectives the Authority is seeking to
achieve.
13. EG 8.2.3 states that in the course of its supervision and monitoring of a firm or as
part of an enforcement action, the Authority may make it clear that it expects the
firm to take certain steps to meet regulatory requirements. In the vast majority of
cases the Authority will seek to agree with a firm those steps the firm must take to
address the Authority’s concerns. However, where the Authority considers it
appropriate to do so, it will exercise its formal powers under section 55J or 55L of
the Act where the Authority considers it appropriate to ensure such requirements
are met. This may include where, amongst other factors, the Authority has serious
concerns about a firm, or about the way its business is being or has been conducted
or is concerned that the consequences of a firm not taking the desired steps may
be serious.
14. EG 8.3.1 states that the Authority may impose a requirement so that it takes effect
immediately or on a specified date if it reasonably considers it necessary for the
requirement to take effect immediately (or on the date specified), having regard to
the ground on which it is exercising its own-initiative powers.
15. EG 8.3.2 states that the Authority will consider exercising its own-initiative power
where: 1) the information available to it indicates serious concerns about the firm
or its business that need to be addressed immediately; and 2) circumstances
indicate that it is appropriate to use statutory powers immediately to require and/or
prohibit certain actions by the firm in order to ensure the firm addresses these
concerns.
16. EG 8.3.3 states that it is not possible to provide an exhaustive list of the situations
that will give rise to such serious concerns, but they are likely to include some of
the following characteristics: 1) information indicating significant loss, risk of loss
or other adverse effects for consumers, where action is necessary to protect their
interests; and 2) evidence that the firm has submitted to the Authority inaccurate
or misleading information so that the Authority becomes seriously concerned about
the firm’s ability to meet its regulatory obligations.
17. EG 8.3.4 states that the Authority will consider the full circumstances of each case
when it decides whether an imposition of a requirement is appropriate and sets out
a non-exhaustive list of factors the Authority may consider, these include: 1) the
extent of any consumer loss or risk of consumer loss or other adverse effect on
consumers; 2) the extent to which customer assets appear to be at risk; 3) the
financial resources of the firm; 4) the nature of the false or inaccurate information;
5) the impact that use of the Authority’s own-initiative powers will have on the
firm's business and on its customers; and 6) The risk that the firm’s business may
be used or has been used to facilitate financial crime, including money laundering.
18. EG 8.4.4 states that examples of requirements that the Authority may consider
imposing when exercising its own-initiative power are: 1) a requirement not to take
on new business; 2) a requirement not to hold or control client money; and 3) a
requirement that prohibits the disposal of, or other dealing with, any of the firm’s
assets or restrict those disposals or dealings.
1
ACTION
1.1 For the reasons given in this First Supervisory Notice (“FSN”), and pursuant to
regulations 12(1) and 15 of the Payment Services Regulations 2017 (“the PSR”), the
Financial Conduct Authority (“the Authority”) has decided to vary the registration
granted to Motmaen Limited (“the Firm”) pursuant to Part 2 of the PSR by:
1)
Removing the following payment service the Firm provides:
a)
Money remittance; and
2)
Imposing the following requirements (“the Requirements”) on the Firm with
immediate effect:
Restriction on new payment service users
a)
The Firm must not onboard or register any new payment service users
(“PSUs”) or agents.
Payment of liabilities
b)
By 4pm 22 May 2024, the Firm must pay all liabilities owed to any
existing PSUs. Unless instructed otherwise by the relevant PSU, the Firm
must make the payment to the same payment account the PSU (or a
third party on the PSU’s behalf) used to transfer the funds to the Firm.
Retention and notification requirements
c)
The Firm must by 4pm 22 May 2024 notify all PSUs, customers and
agents in writing that it has ceased providing payment services and of
the imposition and effect of the Requirements in a form to be agreed in
advance with the Authority.
d)
If the Firm has a website it must, by 4pm 22 May 2024, publish in a
prominent place on its website a notice setting out that it has ceased
providing payment services and of the imposition and effect of the
Requirements in a form to be agreed in advance with the Authority.
e)
The Firm must provide to the Authority in writing by 4pm 22 May 2024:
i.
Confirmation that it has ceased providing payment services;
ii.
Confirmation that it is in compliance with these Requirements; and
iii.
A statement to evidence the payment of liabilities to PSUs.
f)
The Firm must secure and preserve all records and/or information
(physical or electronic) relating to payment services in their original
form, or in a copy provide to be identical to the source material. These
must be retained in a form and at a location within the United Kingdom,
to be notified to the Authority in writing by 4pm 22 May 2024, such that
they can be provided to the Authority, or to a person named by the
Authority, promptly on its request.
g)
By 4pm 22 May 2024, the Firm must update its details displayed on the
Authority’s Register using Connect. This must include, but not be limited
to all addresses, telephone numbers, email addresses and complaint
contact details.
1.2 The effect of the removal of the payment service in accordance with paragraph 1.1(1)
is that the Firm cannot provide any payment services.
1.3 The variation shall take immediate effect and remain in force unless and until varied
or cancelled by the Authority (either on the application of the Firm or of the
Authority’s own volition).
2
REASONS FOR ACTION
2.1 The Authority has concluded, on the basis of the facts and matters described below,
that it is necessary to vary the Firm’s registration by removing the payment services
it provides and imposing the Requirements because it appears that:
1) Pursuant to regulation 12(1)(a) of the PSR, the Firm no longer meets, or it is
unlikely to meet, the conditions for registration in regulation 14(11), because
HMRC cancelled the Firm’s registration on HMRC’s Supervised Register for
Business (“the Supervised Business Register”) and the Firm has not been on the
Supervised Business Register since 11 September 2023. In addition, the Firm did
not inform the Authority that HMRC had cancelled its registration, which is a
major change in circumstance that it should have informed the Authority of
pursuant to regulation 37;
2) Pursuant to regulation 12(1)(e) of the PSR, the Firm’s provision of payment
services is unlawful because HMRC cancelled the Firm’s registration on the
Supervised Business Register; and/or
3) Pursuant to regulation 12(1)(d) of the PSR, it is desirable in order to protect the
interests of consumers because the Firm is not engaging with the Authority in an
open and cooperative and had not disclosed to the Authority information relating
to it which the Authority would reasonably expect notice of, such that it may have
failed to comply with Principle 11 (Regulations with regulators) because it
appears it has:
a) provided payment services despite being made aware that it was unlawful
to do so and despite being made aware that it was not meeting its conditions
for registration as a small payment institution (“SPI”); and
b) failed to respond to the Authority’s repeated communications relating to the
action by HMRC.
The Firm’s actions to date cast serious doubt as to its ability and willingness to
observe regulatory requirements and demonstrate that it poses a significant risk
of harm to consumers.
3
DEFINITIONS
3.1 The definitions below are used in this FSN:
“Act” means the Financial Services and Markets Act 2000;
“Authority” means the Financial Conduct Authority;
“the Firm” means Motmaen Limited;
“Financial Services Register” means the public record maintained by the Authority;
“FSN” means First Supervisory Notice;
“HMRC” means HM Revenue and Customs;
“LBA” means Letter Before Action;
“MLR” means the Money Laundering, Terrorist Financing and Transfer of Funds
(Information on the Payer) Regulations 2017;
“Money remittance” means a service for the transmission of money (or any
representation of monetary value), without any payment accounts being created in
the name of the payer or the payee, where (a) funds are received from a payer for
the sole purpose of transferring a corresponding amount to a payee or to another
payment service provider acting on behalf of the payee, or (b) funds are received on
behalf of, and made available to, the payee;
“Money service business” means an undertaking which by way of business operates
a currency exchange office, transmits money (or any representation of monetary
value) by any means or cashes cheques which are made payable to customers;
“PSR” means the Payment Services Regulations 2017;
“PSU” means payment service user;
“Requirements” means the terms imposed on the Firm by this First Supervisory
Notice as outlined in section 1 above;
“SPI” means a small payment institution registered pursuant to regulation 14 of the
PSR and included by the Authority in the Financial Services Register pursuant to
regulation 4(1)(b) of the PSR;
“Supervised Business Register” means the Supervised Business Register maintained
by HMRC under the MLR;
“Tribunal” means the Upper Tribunal (Tax and Chancery Chamber).
4
FACTS AND MATTERS
4.1 The Firm was incorporated on 10 January 2007. The Firm was first registered as an
SPI on 13 November 2014 under the Payment Services Regulations 2009. The Firm
was re-registered as an SPI on 2 January 2019 under the PSR. The sole payment
service it is registered to provide is money remittance.
4.2 The conditions of registration in the PSR require the Firm to be included in the
Supervised Business Register (regulation 14(11)). HMRC is a supervisory body under
the MLR for certain firms, including a money service business such as the Firm
(regulation 7(1)). Paragraph 56(1) of the MLR provides that a person must not act
as a money service business unless it is included in the appropriate register.
4.3 The Firm was registered with HMRC as a money service business on 1 March 2018.
4.4 On 11 August 2023, HMRC issued a Notice of Cancellation of Registration (the
“Notice”) to the Firm informing it of HMRC’s decision to cancel its HMRC registration
effective from 11 September 2023 pursuant to regulation 60(1)(a) and 60(3)(a) of
the MLR.
4.5 The Notice informed the Firm that it must cease carrying out relevant activity by 11
September 2023, and that the Firm may be subject to further civil sanctions including
financial penalties and/or prosecution if it trades as a money service business from
that date.
4.6 The cancellation was effective from 11 September 2023, and it was unlawful for the
Firm to act as a money service business (and therefore provide payment services)
from that date. The Firm is not currently registered with HMRC as a money service
business.
4.7 As an SPI, the Firm is required by regulation 37(1)(b) of the PSR to provide details
of a significant change in circumstances which is relevant to its fulfilment of the
conditions for registration. An SPI’s registration on the Supervised Business Register
is relevant to the fulfilment of the conditions for registration under regulation 14(11)
of the PSR. The Firm did not inform the Authority that its HMRC registration had been
cancelled and has not, despite the issue being raised in correspondence by the
Authority since 19 October 2023, provided any detail to the Authority as to the action
nor the surrounding circumstances.
4.8 On 19 October 2023, the Authority wrote to the Firm by email stating that it was
aware that its registration had been cancelled by HMRC, and that the Firm was unable
to meet its condition for registration as an SPI under regulation 14(11) of the PSR
as a result. The Authority invited the Firm to sign an undertaking, which included
that the Firm should refrain from providing payment services and pay all liabilities
owed to relevant PSUs as soon as possible.
4.9 The Authority asked the Firm for a response by 26 October 2023. As the Firm did
not respond by that date, the Authority sent a further email to the Firm on 1
November 2023 asking for acknowledgment of receipt and a response in respect of
the undertaking by 8 November 2023.
4.10 As the Authority did not receive any response from the Firm to those emails, the
Authority sent a further email on 30 November 2023 reminding the Firm of its
obligations under Principle 11 (Relations with regulators) of the Principles for
Businesses to deal with the Authority in an open and cooperative way. It stated that
if the Firm did not respond by 7 December 2023, the Authority may consider using
its supervisory powers to ensure that the Firm does not provide payment services
whilst not meeting its conditions for registration.
4.11 On 10 January 2024, the Authority sought to contact the Firm via telephone, and
subsequently followed this with a further email requesting a response to the earlier
correspondence.
4.12 The Authority did not receive any response from the Firm in response to these
communications, nor any information relating to the action taken against the Firm
by HMRC.
4.13 Between January and April 2024, the Authority engaged with the Firm regarding
its concerns that the Firm had not submitted certain regulatory returns. On 19
January 2024, the Authority sent an email to the Firm stating that it appeared from
the Authority’s systems that the Firm was not providing payment services and that
the Authority would, therefore, commence enforcement action if the Firm did not
apply to cancel its registration.
4.14 On 20 January 2024, the Firm responded by email stating “my firm is still providing
payment services as usual.” In the same email, the Firm also stated that it had paid
the “annual fee” to the Authority on 4 September 2023 and purported to provide
evidence of this. The Firm did not, however, submit at this point the relevant
regulatory returns, nor did it provide any evidence to demonstrate that it was
providing payment services, or evidence as to the extent of any such activity.
4.15 On 8 February 2024, the Authority sent the firm a first Letter Before Action (“LBA”),
which noted that the Firm had failed to submit the required regulatory returns and
that the Firm had not provided any evidence that it was undertaking payment
services. The first LBA stated that, absent the Firm submitting the required returns
and providing this evidence or the Firm applying to cancel its registration by 22
February 2024, the Authority would proceed to recommend to a decision-maker
that the Firm’s registration as a SPI should be cancelled.
4.16 On 20 February 2024, the Firm responded to the first LBA stating that it would
provide the “requested information” by 22 February 2024.
4.17 On 8 April 2024, having not received a response from the Firm since its email on
20 February 2024, the Authority sent a second LBA to the Firm. The second LBA
referred to the first LBA and the earlier correspondence with the Firm, but also
explained that the Authority had been notified that the Firm’s registration on the
Supervised Business Register had been cancelled by HMRC on 11 September 2023.
The second LBA noted that, in addition the continued failure to submit regulatory
returns, the fact that the Firm had stated that it was continuing to provide payment
services after the point at which the Firm’s HMRC registration had been cancelled
meant that it appeared to be providing payment services unlawfully.
4.18 The Firm submitted three outstanding regulatory returns on 11 April 2024. On 14
April 2024, the Firm emailed the Authority regarding its returns: it did not, however,
address the Authority’s other concerns. The Firm’s email apologised for the delay in
submitting the relevant regulatory returns and cited certain issues with submitting
other outstanding regulatory returns. The email from the Firm made no reference to
the fact that the Firm’s registration on the Supervised Business Register had been
cancelled by HMRC nor reference to the Authority’s communications which had
explained that continued provision of payment services by the Firm despite the de-
registration by HMRC was unlawful. The Authority has serious concerns that the Firm
is, as a result of its assertions relating to its ongoing activity, continuing to provide
payment services, despite also being aware of the Authority’s concerns in this regard.
4.19 The Authority has not received any further communications from the Firm. The
Firm has not, as at the date of this Notice, applied to cancel its registration as an
SPI.
Failings and risks identified
Conditions for registration
4.20 The Authority has serious concerns that the Firm does not appear to be meeting
the conditions for registration as an SPI under regulation 14(11) of the PSR because
the Firm has not been included on the Supervised Business Register since 11
September 2023.
4.21 The Firm has not informed the Authority that HMRC had cancelled its registration.
The Authority considers that the cancellation is a significant change in circumstances
in respect of the Firm’s conditions for registration as an SPI under regulations 14(11)
and 37(1)(b) of the PSR, and that the Firm should have informed the Authority of
this. The Firm has also failed to respond to the Authority’s various communications,
sent to the Firm from 19 October 2023 onwards, regarding this specific issue and
failed to provide any detail relating to the significant change in circumstances
(including any detail on the circumstances regarding HMRC’s action). The Authority
is therefore very concerned that the Firm has failed to be open and cooperative and
failed to disclose to the Authority appropriately anything relating to the Firm of which
the Authority would reasonably expect notice.
4.22 On the basis of the facts and matters set out, the Authority considers that it is
desirable to exercise the power under regulation 12(1)(a) of the PSR.
Unlawful provision of payment services
4.23 It is unlawful for the Firm to provide payment services because HMRC cancelled its
registration under regulation 60 of the MLR on 11 September 2023.
4.24 The Authority has serious concerns that the Firm has been providing payment
services unlawfully since 11 September 2023 because HMRC cancelled its registration
under regulation 60 of the MLR effective 11 September 2023.
4.25 The Firm informed the Authority on 20 January 2024 that it is continuing to provide
payment services. The Firm has not, in response to subsequent correspondence from
the Authority, informed the Authority that it has ceased to do so or applied to cancel
its registration as an SPI.
4.26 On the basis of the facts and matters set out, the Authority considers that it is
desirable to exercise the power under regulation 12(1)(e) of the PSR.
Consumer protection
4.27 The Authority has serious concerns that the Firm may expose consumers to the
risk of significant harm. The Firm is not engaging with the Authority in an open and
cooperative manner and has not disclosed to the Authority information relating to it
which the Authority would reasonably expect notice, such that it may have failed to
comply with Principle 11 (Relations with regulators) because it has:
a)
Continued to provide payment services after 11 September 2023 when it knew
from 11 August 2023 that it was unlawful to trade as a money service business
(and therefore provide payment services) and knew, from at least 19 October
2023, that it was not meeting its conditions for registration as an SPI; and
b)
Failed to respond to the Authority’s repeated communications relating to the
action by HMRC.
4.28 The Firm’s actions to date cast serious doubt as to its ability and willingness to
observe regulatory requirements and demonstrate that it poses a significant risk of
harm to consumers.
4.29 On the basis of the facts and matters set out, it appears to the Authority that it is
desirable to exercise the power under regulation 12(1)(d) of the PSR.
5
CONCLUSION
5.1 The regulatory provisions relevant to this First Supervisory Notice are set out in the
Annex.
Analysis of failings and risks
5.2 The Authority has concluded, in light of the matters set out above, that it is necessary
to exercise its own-initiative power to vary the Firm’s registration because the Firm
is not meeting the conditions for registration and a variation is desirable in order to
protect the interests of consumers. The Authority has concluded that it is necessary
to vary the firm’s registration by:
1) removing its money remittance payment service; and
2) imposing the Requirements.
5.3 The Authority considers that variation of the Firm’s registration by removing its
payment service and imposing the Requirements are a proportionate and appropriate
means to address the current and immediate risks and that this action is desirable
to protect the interests of consumers, in accordance with regulation 12(1)(d) of the
PSR.
Timing and duration of the Requirements
5.4 It is necessary to vary the Firm’s registration by removing its payment service and
imposing the Requirements immediately given the seriousness of the risks and the
need to protect consumers’ interests.
5.5 The Authority considers that it is necessary for the variation to remain in place
indefinitely or until such time as the Authority considers it appropriate for the
variation and/or Requirements to be lifted.
6
PROCEDURAL MATTERS
Decision maker
6.1 The decision which gave rise to the obligation to give this First Supervisory Notice
was made by an Authority staff member under executive procedures according to
DEPP 2.3.7G and DEPP 4.1.7G.
6.2 This First Supervisory Notice is given to the Firm under regulation 12(6) of the PSR
and in accordance with regulation 12(7) of the PSR.
6.3 The following statutory rights are important.
Representations
6.4 The Firm has the right to make written representations to the Authority (regardless
of whether it refers this matter to the Tribunal). The Firm may also request to make
oral representations, but the Authority will only consider this in exceptional
circumstances according to DEPP 2.3.1AG. The deadline for providing written
representations and notifying the Authority that the Firm wishes to make oral
representations is 03 June 2024 or such later date as may be permitted by the
Authority. Any notification or representations should be sent to the Decision-Making
Secretariat (EDMCaseInbox@fca.org.uk).
The Tribunal
6.5 The Firm has the right to refer the matter to which this First Supervisory Notice
relates to the Tribunal. The Tax and Chancery Chamber is the part of the Tribunal
which, amongst other things, hears references arising from decisions of the
Authority. Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper
Tribunal) Rules 2008, the Firm has 28 days from the date on which this First
Supervisory Notice is given to it to refer the matter to the Tribunal.
6.6 A reference to the Tribunal can be made by way of a reference notice (Form FTC3)
signed by or on behalf of the Firm and filed with a copy of this First Supervisory
Notice. The Tribunal’s contact details are: Upper Tribunal (Tax and Chancery
Chamber), 5th Floor, Rolls Building, Fetter Lane, London EC4A 1NL (telephone: 020
7612 9700; email: uttc@justice.gov.uk)
6.7 Further information on the Tribunal, including guidance and the relevant forms to
complete, can be found on the HM Courts and Tribunal Service website:
https://www.gov.uk/government/collections/upper-tribunal-tax-and-chancery-
chamber-
6.8 The Firm should note that a copy of the reference notice (Form FTC3) must also be
sent to the Authority at the same time as a reference is filed with the Tribunal. A
copy of the reference notice should be sent to the Decision-Making Secretariat
(EDMCaseInbox@fca.org.uk).
Confidentiality and publicity
6.9 The Firm should note that this First Supervisory Notice may contain confidential
information and should not be disclosed to a third party (except for the purpose of
obtaining legal advice on its contents).
6.10 The Firm should note that section 391(5) of the Act, as applied by paragraph 10 of
Schedule 6 of the PSR, requires the Authority, when this First Supervisory Notice
takes effect (and this First Supervisory Notice takes immediate effect), to publish
such information about the matter to which the notice relates as it considers
appropriate.
Authority contacts
6.11 Any questions regarding the executive procedures decision-making process should
be directed to the Decision-Making Secretariat (EDMCaseInbox@fca.org.uk).
Decision made under Executive Procedures
Director, Payments & Digital Assets
RELEVANT STATUTORY PROVISIONS
1. Regulation 7(1) of the PSR provides that the Authority may include in the
authorisation of an authorised payment institution such requirements as it
considers appropriate. Regulation 7(2) of the PSR provides that a requirement may
be imposed to require the person concerned to: 1) take a specified action, or 2) to
refrain from taking a specified action.
2. Regulation 8 of the PSR provides that the Authority may, on the application of an
authorised payment institution, vary that person’s authorisation. Regulation 8(b)
permits the Authority to remove a payment service from those for which it has
granted authorisation. Regulation 8(c) permits the Authority to impose a
requirement such as may, under regulation 7 of the PSR, be included in an
authorisation provided that the Authority is satisfied that the conditions set out in
regulations 6(4) to (9) and regulation 22(1) are being or likely to be met.
3. Regulation 12(1) of the PSR provides that the Authority may vary the authorisation
of an authorised payment institution in any of the ways mentioned in regulation 8
if it appears to the Authority that:
“[…]
(a) The person no longer meets, or is unlikely to continue to meet, any of the
conditions set out in regulation 6(4) to (9) or the requirement in regulation 22(1)
to maintain own funds.
(c) The person would constitute a threat to the stability of a payment system by
continuing to provide a particular payment service or payment services.
(d) The variation is desirable in order to protect the interests of consumers.”
4. Regulation 12(2) of the PSR provides that a variation takes effect immediately if
the notice given under paragraph (6) states that this is the case, or on such date
as may be specified. Regulation 12(3) of the PSR provides that a variation may be
expressed to take effect immediately or on a specified date only if the Authority,
having regard to the ground on which it is exercising the power under paragraph
(1), reasonably considers that it is necessary for the variation to take effect
immediately or, as the case may be, on that date.
5. Regulation 12(6) of the PSR provides that, where the Authority proposes to vary a
person’s authorisation, it must give the person notice.
6. Regulation 14 of the PSR provides the conditions for registration as a small payment
institution, including the condition under regulation 14(11) that the applicant must
comply with a requirement of the MLR to be included in a register maintained under
those Regulations where such a requirement applies to the applicant.
7. Regulation 15 of the PSR provides that regulations 7 to 12 apply to the registration
of a small payment institution as they apply to the authorisation as a payment
institution as if:
(a) references to authorisation were references to registration;
(c) in regulation 8 […]—
(i) for “an authorised payment institution” there were substituted “small payment
institution”; and
(ii) for “provided that” to the end there were substituted—
“provided that the FCA is satisfied that the conditions set out in regulation 14(4) to
(11) are being or are likely to be met and that the monthly average over any period
of 12 months of the total amount of payment transactions executed by the
institution, including any of its agents in the United Kingdom, continues not to
exceed 3 million euros (“the financial limit”).”;
(e) in regulation 12 […] for sub-paragraph (a) there were substituted—
“(a) the person does not meet, or is unlikely to meet, any of the conditions set out
in regulation 14(4) to (11) or the financial limit referred to in regulation 8.”
8. Section 391 of the Act, as applied in modified form by paragraph 10 of Schedule 6
to the PSR, provides that:
(5)
When a supervisory notice takes effect, the Authority must publish such
information about the matter to which the notice relates as it considers appropriate.
(6)
The Authority may not publish information under this section if, in its
opinion, publication of the information would be:
(a) unfair to the person with respect to whom the action was taken (or was
proposed to be taken),
(b) prejudicial to the interests of consumers, or
(c) detrimental to the stability of the UK financial system
(7)
Information is to be published under this section in such manner as
the Authority considers appropriate.”
Relevant Regulatory provisions
9. The Authority's approach in relation to its own-initiative powers is set out in the
Enforcement Guide (“EG”), certain provisions of which are summarised below.
10. EG 19.20 outlines the Authority’s policy in respect of the use of its powers under
the PSR. EG 19.20.5 provides that the PSR, for the most part, mirror the Authority’s
investigative, sanctioning and regulatory powers under the Act and that the
Authority has decided to adopt procedures and policies in relation to the use of
those powers akin to those it has under the Act.
11. The Authority considers that the powers under regulation 12(1) of the PSR are
similar to those under sections 55J and 55L of the Act and that the provisions of
EG 8 “Variation and cancellation of permission and imposition of requirements on
the Authority’s own-initiative and intervention against incoming firms” are
applicable.
12. EG 8.2.1 states that the Authority will have regard to its statutory objectives and
the range of regulatory tools that are available to it when it considers how it should
deal with a concern about a firm. It will also have regard to: 1) the responsibilities
of a firm’s management to deal with concerns about the firm or about the way its
business is being or has been run; and 2) the principle that a restriction imposed
on a firm should be proportionate to the objectives the Authority is seeking to
achieve.
13. EG 8.2.3 states that in the course of its supervision and monitoring of a firm or as
part of an enforcement action, the Authority may make it clear that it expects the
firm to take certain steps to meet regulatory requirements. In the vast majority of
cases the Authority will seek to agree with a firm those steps the firm must take to
address the Authority’s concerns. However, where the Authority considers it
appropriate to do so, it will exercise its formal powers under section 55J or 55L of
the Act where the Authority considers it appropriate to ensure such requirements
are met. This may include where, amongst other factors, the Authority has serious
concerns about a firm, or about the way its business is being or has been conducted
or is concerned that the consequences of a firm not taking the desired steps may
be serious.
14. EG 8.3.1 states that the Authority may impose a requirement so that it takes effect
immediately or on a specified date if it reasonably considers it necessary for the
requirement to take effect immediately (or on the date specified), having regard to
the ground on which it is exercising its own-initiative powers.
15. EG 8.3.2 states that the Authority will consider exercising its own-initiative power
where: 1) the information available to it indicates serious concerns about the firm
or its business that need to be addressed immediately; and 2) circumstances
indicate that it is appropriate to use statutory powers immediately to require and/or
prohibit certain actions by the firm in order to ensure the firm addresses these
concerns.
16. EG 8.3.3 states that it is not possible to provide an exhaustive list of the situations
that will give rise to such serious concerns, but they are likely to include some of
the following characteristics: 1) information indicating significant loss, risk of loss
or other adverse effects for consumers, where action is necessary to protect their
interests; and 2) evidence that the firm has submitted to the Authority inaccurate
or misleading information so that the Authority becomes seriously concerned about
the firm’s ability to meet its regulatory obligations.
17. EG 8.3.4 states that the Authority will consider the full circumstances of each case
when it decides whether an imposition of a requirement is appropriate and sets out
a non-exhaustive list of factors the Authority may consider, these include: 1) the
extent of any consumer loss or risk of consumer loss or other adverse effect on
consumers; 2) the extent to which customer assets appear to be at risk; 3) the
financial resources of the firm; 4) the nature of the false or inaccurate information;
5) the impact that use of the Authority’s own-initiative powers will have on the
firm's business and on its customers; and 6) The risk that the firm’s business may
be used or has been used to facilitate financial crime, including money laundering.
18. EG 8.4.4 states that examples of requirements that the Authority may consider
imposing when exercising its own-initiative power are: 1) a requirement not to take
on new business; 2) a requirement not to hold or control client money; and 3) a
requirement that prohibits the disposal of, or other dealing with, any of the firm’s
assets or restrict those disposals or dealings.