FINAL NOTICE

ACTION

1.
By an application received by the FSA on 06 December 2010 (“the Application”)
Mass Pays Ltd (“Mass”) 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.
The Application is incomplete.

3.
For the reasons listed below and pursuant to Regulation 13 of the PSRs, the FSA has
refused the Application.

SUMMARY OF REASONS

4. By its Warning Notice dated 22 December 2011 (“the Warning Notice”) issued
pursuant to Regulation 9(7) of the PSRs, (as modified by Regulation 14), the FSA

gave notice that it proposed to refuse the Application and that Mass was entitled to
make representations to the FSA about that proposed action.

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

6. By its Decision Notice dated 22 March 2012 ("the Decision Notice"), the FSA gave
Mass notice that it had decided to take the action described above.

7. Under section 133(1) of the Act, Mass 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.

8.
Under section 390(1) of the Act, the FSA, having decided to refuse the Application
and there having been no reference of that decision to the Tribunal, must give Mass
Final Notice of its refusal.

9. The FSA decided to refuse the Application and to give this Final Notice as Mass has
failed to provide the information required by the FSA, and the FSA has accordingly
concluded that Mass does not meet the ‘Conditions for registration as a small payment
institution’ set out in Regulation 13 of the PSRs on the basis that Mass has failed to
demonstrate that its head office, registered office or place of residence, is in the
United Kingdom.

DEFINITIONS

10. The definitions below are used in this Final Notice.

“the PSRs” means the Payment Services Regulations 2009

“the FSA” means the Financial Services Authority

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

FACTS AND MATTERS

11. The Application for registration as a small payment institution, made under the PSRs,
was received on 06 December 2010.

12. Further information was requested from Mass to complete the Application but the
applicant has not responded. Details of all the communications between the FSA and
Mass are set out below:

(1) On 11 May 2011 the FSA sent an email to Mass (using the email address
provided in the Application) requesting further information in respect of
Mass’ application. This included seeking:

a. Mass’ HMRC registration number (as confirmation that Mass had
complied with the requirement for registration with HMRC under the
Money Laundering Regulations 2007) – Mass had failed to provide this
information in response to the relevant question in the Application;

b. Mass’ brief business model/plan;

c. Mass’ fraud management controls;

d. Mass’ complaints procedures; and

e. confirmation of Mass’ proposed plan in respect of the safeguarding
provisions.

(2) No response having been received, a further email was sent to Mass at the
same address on 10 August 2011. In that email the FSA:

a. noted that the Application remains incomplete;

b. noted that the FSA is required to determine an incomplete application
within 12 months of its receipt;

c. stated that, in the absence of a full response to the outstanding queries,
the FSA would recommend that the application be refused; and

d. stated that a refusal of the Application would result in the issuing of a
Warning Notice, on which Mass would be entitled to make
representations.

(3) The FSA also made a telephone call to the landline number provided in the
Application on 10 August 2011 and left a message with Mass’ receptionist.

(4) No response having been received, further telephone calls were made by the
FSA to the same landline number on 19 August 2011 and 22 August 2011
and message left with Mass’ receptionist.

(5) No responses having been received, the FSA made a further telephone call
to the same landline number on 31 August 2011 but a “number unavailable”
message was heard. The FSA also attempted to contact Mass using the
mobile number provided in the Application, but the telephone was not
answered.

(6) Subsequent attempts were also made to contact Mass through
EA Associates (UK) LLP, the firm which submitted the application on its
behalf. Michael Michaelides of EA Associates (UK) LLP undertook to

contact Mr. Novichkov. On 26 September 2011 he advised the FSA by
email that his attempts to contact Mass by email had been unsuccessful. On
3 October 2011 he advised by telephone that his further attempts to contact
Mass had not been successful; he also suggested that the application be
cancelled, but stated that he was not authorised to speak on behalf of Mass.

(7) Following these various (unsuccessful) attempts by the FSA to make
contact with Mass, on 04 October 2011 the FSA wrote to Mass at the
address of its registered office. The letter was sent special delivery. In that
letter the FSA:

a. referred to its outstanding queries sent by email of 11 May 2011;

b. noted that the FSA is required to determine an incomplete application
within 12 months of its receipt;

c. stated that, in the absence of full response to the outstanding queries, the
FSA would recommend that the Application be refused; and

d. stated that a refusal of the Application would result in the issuing of a
Warning Notice, on which Mass would be entitled to make
representations.

(8) No response having been received, on 25 October 2011 the FSA wrote to
Mass at the postal address provided in the Application. In that letter the
FSA:

a. referred to its outstanding queries;

b. noted that the FSA is required to determine an incomplete application
within 12 months of its receipt;

c. stated that, in the absence of a full response to the outstanding queries,
the FSA would determine the Application on the basis of the incomplete
information provided;

d. noted that Mass’ failure to respond to the FSA’s queries raises
significant doubts as to the accuracy of the address/contact details
provided to the FSA in the Application;

e. noted the FSA’s view that Mass had not demonstrated its compliance
with regulation 13(5) of the PSRs; and

f. stated that, in light of the above matters, the FSA would look to
recommend refusal of the Application, which would result in the issuing
of a Warning Notice if the recommendation was accepted by the
decision-maker.

(9) The letters dated 04 October 2011 and 25 October 2011 that were sent by
special delivery to Mass have each been returned to the FSA marked
‘addressee gone away’. All attempts to contact Mass have proven
unsuccessful.

13. The FSA has not received a substantive response to any of the communications set
out above.

CONCLUSIONS

14. Pursuant to Regulation 13(1) of the PSRs the FSA may refuse an application for
registration as a small payment institution if any of the conditions in paragraphs (2) –
(6) of Regulation 13 are not met. The Regulations and FSA guidance relevant to this
Final Notice are referred to in Annex A.

15. The FSA considers that an applicant’s head office is the location of the firm's central
management and control, which includes the directors and other senior management
and central administrative functions of the firm.

16. On the basis of the facts and matters described above, Mass has failed to respond
substantively to the FSA’s questions. Mass’ failure to respond to the FSA’s questions
raises significant doubts that the address/contact details provided are accurate and
that Mass’ central management, administrative functions and head office are in the
UK.

17. Mass has therefore failed to meet the condition in Regulation 13(5) that requires that
its “head office, registered office or place of residence, as the case may be, must be in
the United Kingdom”.

IMPORTANT NOTICES

18. This Final Notice is given to Mass pursuant to Schedule 5 Part 1 (7) of the PSRs
(which incorporates section 390(1) of the Act).

19. 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 FSA
must publish such information about the matter to which the Final Notice relates as
the FSA considers appropriate. The information may be published in such manner as
the FSA considers appropriate. However, the FSA may not publish information if
such publication would, in the opinion of the FSA, be unfair to Mass or prejudicial to
the interests of consumers.

FSA contacts

20. For more information concerning this matter generally, contact Jonathan
Bromberger, Manager, PSD Team at the FSA (direct line: 020 7066 9080 /email:
jonathan.bromberger@fsa.gov.uk.

Sharon Campbell
on behalf 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 FSA.

3. Regulation 12(4) states that at any time after receiving an application and before
determining it, the FSA 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 FSA 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(2) states that the application must comply with the requirements of,
and any requirements imposed under, regulation 12.

6. Regulation 13(5) requires that the applicant’s head office, registered office or place of
residence, as the case may be, must be in the United Kingdom.

7. Regulation 13(6) requires that the applicant must comply with a requirement of the
Money Laundering Regulations 2007 to be included in a register maintained under
those Regulations where such a requirement applies to the applicant.

8. Regulation 14 provides for regulations 7 to 11 to apply to registration as an SPI as
they apply to authorisation as a payment institution (subject to certain modifications).

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

The Act (ie the Financial Services and Markets Act 2000)

10. Part 26 section 390(1) states that if the FSA 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 FSA must give the person concerned a Final Notice.

11. Part 26 section 391(4) states that the FSA must publish such information about the
matter to which a final notice relates as it considers appropriate.

12. Part 26 section 391(6) states that the FSA 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.

13. Part 26 section 391(7) states that information is to be published in such a manner as
the FSA considers appropriate.

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

14. In exercising its powers in relation to the approval of an application for registration as
a small payment institution, the FSA must have regard to guidance published in the
FSA’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 May 2010..

15. The paragraphs relevant to the refusal of the Application are set out below (references
to ‘we’ are references to the FSA).

16. Paragraph 3.7: At any time after receiving an application for authorisation or
registration (or a variation of either of these) and before determining it, we can require
the applicant to provide such further information as we reasonably consider necessary
to enable us to determine the application

17. Paragraph 3.91: The location of the head office, registered office, or principal place of
business is to be supplied as part of the contact details.

18. Paragraph 3.97: We have to make a decision on a complete application within three
months of receiving it. An application is complete when we have received all the
information and evidence needed for us to make a decision. We will let the applicant
know if we need more information.

19. Paragraph 3.98: In the case of an incomplete application, we must make a decision
within 12 months of receipt. However, if that date is reached and discussions with the
firm have not resulted in us receiving all the information we need to make our
decision, it is likely that an incomplete application will result in a refusal. This is
because it is unlikely we will have been able to satisfy ourselves that the applicant has
met the authorisation/registration requirements.

20. Paragraph 3.105: We 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.