Final Notice
FINAL NOTICE
1. ACTION
1.1
By an application dated 11 October 2018 (the “Application”) Transway Ltd
(“Transway”) applied under Regulation 13 of the Payment Services
Regulations 2017 (the “PSRs 2017”) for re-registration as a small payment
institution:
1.2
The Application was complete on receipt.
1.3
The Authority has refused the Application.
2.
SUMMARY OF REASONS
2.2
On the basis of the facts and matters described below, the Authority has
concluded that Transway has not satisfied the conditions for registration as a
small payment institution set out in in regulation 14(6) and (7) of the PSRs
2017. These conditions require the applicant to satisfy the Authority that
persons with a qualifying holding in the applicant are fit and proper persons and
that the directors, and persons responsible for the management, of the
applicant are of good repute.
2.3
Mr Singer is the sole director of Transway and is responsible for the
management of Transway. Mr Singer is also the sole shareholder (and therefore
a controller, with a qualifying holding) of the company.
2.4
The Authority is not satisfied that Mr Singer is fit and proper or of good repute.
This is because Mr Singer, on behalf of Transway, failed to disclose to the
Authority matters material to the Authority’s assessment of his fitness and
propriety, and good repute, as the sole director and shareholder of Transway.
As a small payment institution registered under the Payment Services
Regulations 2009 (the “PSRs 2009”), Transway had an obligation to notify the
Authority of any significant change in circumstances relevant to its fulfilment of
the conditions for registration. Transway, which at all material times was
managed by Mr Singer as the sole director and controller, failed to do so.
Additionally, Mr Singer failed, on Transway’s behalf, to provide disclosure of
material matters in the Application. In the Authority’s view, he failed to
appreciate the need to disclose these matters, and this demonstrates a serious
failure by Mr Singer to understand important requirements of the regulatory
regime.
2.5
Accordingly, the Authority has concluded that Mr Singer has not demonstrated
a readiness and willingness to comply with the standards and requirements of
the regulatory system, has not been candid in his dealings with the Authority
and has not demonstrated an adequate level of competence and capability. The
Authority is therefore not satisfied that Mr Singer is fit and proper, having
regard to the need to ensure the sound and proper conduct of Transway’s
affairs; it is therefore also not satisfied that he is of good repute. For these
reasons, Transway has not met the conditions for registration in regulation
14(6) and (7) and the Authority decided to refuse the Application.
2.6
By reason of its Decision Notice dated 19 June 2019, the Authority gave
Transway notice that it had decided to refuse the Application.
2.7
Transway Ltd had 28 days from the date the Decision Notice was given to refer
the matter to the Upper Tribunal. No referral was made to the Upper Tribunal
within this period of time or to date.
2.8
Under section 390(1) of the Act (which applies by reason of paragraph 10 of
Schedule 6, Part 1 of the PSRs 2017), the Authority, having decided to refuse
the Application and there having been no reference of that decision to the
Tribunal, must give to Transway this Final Notice of its refusal.
3. DEFINITIONS
3.1
The definitions below are used in this Final Notice.
“Act” means the Financial Services and Markets Act 2000 (as modified and
applied by the PSRs 2017);
“Application” mean the application referred to in paragraph 1 of this Notice;
“Application Form” means an ‘Application for Re-registration’ form submitted
to the Authority by Transway, being the form referred to in paragraph x of this
Notice;
“authorised payment institution” has the meaning set out in the PSRs 2017;
“Authority” means the body corporate previously known as the Financial
Services Authority and renamed on 1 April 2013 as the Financial Conduct
Authority;
“Current Approach Document” means the publication entitled ‘Payment
Services and Electronic Money – Our Approach. The FCA’s role under the
Payment Services Regulations 2017 and the Electronic Money Regulations
2011’;
“HMRC” means Her Majesty’s Revenue and Customs;
“PI” means and authorised payment institution or a small payment institution
“Previous Approach Document” mean the publication entitled ‘The FCA’s role
under the Payment Services Regulations 2009 – Our Approach’, published in
June 2013;
“PSD Individual Form” means a ‘PSD Individual’ form submitted to the
Authority by Transway in relation to Mr Singer, dated 14 February 2013, being
the form referred to in paragraph x of this Notice;
“PSRs 2009” means the Payment Services Regulations 2009;
“PSRs 2012” means the Payment Services Regulations 2012;
“PSRs 2017” means the Payment Services Regulations 2017;
“small payment institution” has the meaning set out in the PSRs 2017; and
“Transway” means Transway Ltd.
4.
RELEVANT REGULATORY PROVISIONS
4.1
Details of the regulations and the Authority’s guidance relevant to this Notice
are set out in Annex A.
5.
FACTS AND MATTERS
Background of the application
5.1
Transway was incorporated on 12 February 2004. Mr Moishe Singer is, and has
at all material times been, the 100% shareholder and sole director of Transway,
and responsible for its management.
5.2
Transway was first registered with the Authority as a small payment institution
on 16 August 2011 under the PSRs 2009. It was re-registered with the Authority
on 21 September 2013 in accordance with the requirements of the PSRs 2012.
5.3
The PSRs 2012 introduced requirements that controllers of small payment
institutions must be fit and proper, and that their directors and the persons
responsible for their management must be of good repute and have the
necessary expertise to provide payment services. Accordingly, in February
2013, in the course of Transway’s application for re-registration pursuant to the
requirements of the PSRs 2012, Transway provided information to the Authority
regarding Mr Singer in the PSD Individual Form.
5.4
The PSD Individual Form contained questions relating to, amongst other things,
involvement in criminal investigations, ongoing civil proceedings and regulatory
matters. In particular, the PSD Individual Form confirmed:
i. That neither Mr Singer nor any firm at which he held a position of influence
had ever been the subject of a criminal investigation (even where not
resulting in a conviction);
ii. That no firm at which Mr Singer held a position of influence had ever been
ordered to produce documents pursuant to any criminal investigation or been
the subject of a search pursuant to any criminal investigation;
iii. That Mr Singer was not subject to ongoing civil proceedings; and
iv. That no firm at which Mr Singer held a position of influence had during his
association with that firm ever been criticised, censured, disciplined,
suspended, fined or been the subject of any other disciplinary or intervention
action by any regulatory body.
The Application
5.5
In October 2018, Transway applied to be re-registered with the Authority as a
small payment institution pursuant to the requirements of the PSRs 2017. To
this end, Transway filed with the Authority the Application Form and completed
a declaration confirming the accuracy of the information provided. Mr Singer
was responsible for the Application and signed the accompanying declaration.
5.6
The Application Form included questions which asked Transway to confirm that
information previously provided by the firm was up to date for both the firm’s
PSD individuals (which includes the applicant’s directors where an applicant is
a company, and the persons responsible for its management) and controllers.
Both questions were answered ‘yes’ by Transway. Mr Singer has told the
Authority (and the Authority accepts) that he “did not think to check” the
answers given previously, and whether they should be updated.
5.7
On 14 November 2018, the Authority wrote to Mr Singer on behalf of Transway,
in the course of considering the Application, asking him to confirm that there
had been no changes to information he had previously provided to the
Authority; this was to include any information about individuals or controllers,
such as changes to addresses, or to responses to the disclosure questions.
Compliance consultants engaged by Transway replied on Transway’s behalf
stating that there were no changes after submission of the application.
Criminal Investigation and Civil Cash Forfeiture Proceedings
5.8
The Authority conducted background searches in the course of assessing the
Application.
5.9
As a result of these searches, the Authority identified that Transway was the
subject of investigative actions in connection with a criminal investigation into
money laundering. In October 2016, the police searched the premises of
Transway and seized documents and other materials. The police also seized
from Transway approximately £750,000 in cash, pursuant to the Proceeds of
Crime Act 2002. Mr Singer was interviewed by the police under caution, and
provided the police with written statements.
5.10
The police subsequently applied for an order seeking the forfeiture of
approximately £689,000 of the cash seized from Transway. They commenced
civil cash forfeiture proceedings against Mr Singer in February 2018 and a
hearing to determine the application was listed for April 2019. These
proceedings were withdrawn by the police on 7 February 2019.
5.11
Mr Singer did not notify the Authority, on behalf of Transway, of the
investigative actions taken against him and Transway or the subsequent cash
forfeiture proceedings, either at the time these events occurred or as part of
the Application.
HMRC Disciplinary Action
5.12
The Authority also identified that HMRC visited Transway in 2013 in its capacity
as the firm’s regulator in relation to money laundering. In February 2013, HMRC
wrote to Transway informing it that HMRC had identified a number of
weaknesses with Transway’s anti-money laundering and counter-terrorism
financing procedures which constituted breaches of the Money Laundering
Regulations 2007. These included failures by Transway to: establish and
maintain policies and procedures; apply customer due diligence measures; and
conduct appropriate and risk-sensitive ongoing monitoring of business
customers.
5.13
In 2015, HMRC imposed a fine on Transway of £2,500 in relation to these
breaches.
5.14
Mr Singer did not notify the Authority, on behalf of Transway, of these matters,
either at the time they occurred or as part of the Application.
6.
IMPACT ON THE CONDITIONS FOR REGISTRATION
6.1
Pursuant to regulation 14(1) of the PSRs 2017, the Authority may refuse an
application for registration as a small payment institution only if any of the
conditions in paragraphs (2) to (11) of regulation 14 are not met. The Authority
is of the view, for the reasons set out below, that Transway has not satisfied
the conditions in regulation 14(6) and (7).
6.2
The Authority places considerable importance on receiving accurate and
complete information from those it regulates. Pursuant to regulation 32 of the
PSRs 2009, Transway had an obligation to ensure that it notified the Authority
without undue delay of any significant change in the firm’s circumstances
relevant to fulfilment of the conditions of registration as a small payment
institution, A similar obligation applies to small payment institutions now
registered under the PSRs 2017. As made clear in the guidance set out in both
the Previous Approach Document and the Current Approach Document, the
Authority considers that the requirement to notify it of a significant change in
circumstances includes notification of matters that may impact on the fitness
and propriety of the controllers of a payment institution and the good repute of
its directors.
6.3
Mr Singer is, and was at all material times, the sole director of Transway and
therefore responsible for its compliance with its regulatory obligations, including
its obligation to notify the Authority of significant changes in the firm’s
circumstances. It is the Authority’s view that each of: (i) the involvement of Mr
Singer and Transway in the criminal investigation into money laundering,
including the search of Transway’s premises; (ii) the subsequent civil cash
forfeiture proceedings; and (iii) the criticisms and subsequent disciplinary
action by HMRC should have been notified to the Authority, because:
v. Each of these matters related to, and occurred in connection with, the conduct
by Transway of its payment services business; and
vi. Each of these matters was relevant to the assessment of Mr Singer’s fitness
and propriety, and whether he was of good repute, and was therefore material
to the firm’s ability to meet the conditions of registration.
6.4
Contrary to its regulatory obligations, Mr Singer did not notify the Authority of
any of these matters on behalf of Transway at the time they occurred.
6.5
Moreover, the matters described above all occurred before Mr Singer submitted
the Application. It is the view of the Authority that Mr Singer should have
disclosed in Transway’s Application each of: (i) the criminal investigative steps
taken against Transway, including the search of its premises; (ii) the civil cash
forfeiture proceedings; and (iii) HMRC’s criticisms and subsequent disciplinary
action. Specifically, the Authority considers that these matters should have
been disclosed in response to the questions in the Application Form requiring
Transway to confirm that information previously provided for the firm’s PSD
individuals and controllers was up to date. Each of these matters was relevant
to the Authority’s determination of the Application and the assessment of
whether Transway met the conditions for registration under the PSRs 2017.
However, Mr Singer did not disclose the above matters in the Application. Nor
did he do so (or instruct the compliance consultants to do so on Transway’s
behalf) when prompted by the Authority to confirm that there had been no
changes to the information supplied, including in relation to the disclosure
questions.
6.6
As set out in the Current Approach Document, in considering whether an
individual is fit and proper and of good repute for the purposes of regulations
14(6) and (7), the Authority will consider, amongst other things, the individual’s
competence, capability and experience. The factors the Authority will take into
account include whether the person has been candid and truthful in all their
dealings with any regulatory body and whether the person demonstrates a
readiness and willingness to’ comply with the standards of the regulatory
system and with other legal, regulatory and professional requirements and
standards.
6.7
As the Current Approach Document makes clear, the Authority takes the non-
disclosure of relevant information very seriously. The firm was involved in a
criminal investigation into money laundering, in which a search of its premises
was conducted. The cash forfeiture proceedings arose from the firm’s
involvement in that investigation and sought the forfeiture of a substantial sum
as the proceeds of crime. The HMRC criticisms, and its subsequent disciplinary
action, resulted from failings in the firm’s anti-money laundering systems and
controls. These matters therefore concerned issues relating to financial crime,
and they occurred in the context of the firm conducting its payment services
business and were material matters that should have been disclosed to the
Authority.
6.8
It is the view of the Authority that the failure to disclose these matters
demonstrates a serious failure by Mr Singer to understand important
requirements of the regulatory regime: in particular, the conditions for
registration as a small payment institution and the requirement to notify the
Authority of any significant change in circumstances relevant to Transway’s
fulfilment of the conditions for registration. The Authority considers that Mr
Singer’s failure to understand the requirements for ongoing disclosure, and to
check the previous disclosures made when asked to confirm that the underlying
information had not changed, and update the information accordingly,
demonstrate a serious lack of competence and capability.
6.9
In the light of the matters described above, the Authority is not satisfied that
Mr Singer is fit and proper or of good repute. The Authority has therefore
refused the Application.
7. REPRESENTATIONS
7.1
Annex B contains a brief summary of the key representations made by
Transway and how they have been dealt with. In making the decision which
gave rise to the obligation to give this Notice, the Authority has taken into
account all of the representations made by Transway, whether or not set out
in Annex B.
8. IMPORTANT NOTICES
8.1
This Final Notice is given to Transway Ltd under section 390(1) of the Act (as
applied by paragraph 10 of Schedule 6, Part 1 of the PSRs 2017).
8.2
By reason of paragraph 10 of Schedule 6, Part 1 of the PSRs 2017, 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 Transway or prejudicial to the interests of
consumers or detrimental to the stability of the UK financial system.
8.3
The Authority intends to publish such information about the matter to which
this Final Notice relates as it considers appropriate.
Authority contacts
8.4
For more information concerning this matter generally, contact Paul Ullah,
Manager, Retail Authorisations Department at the Authority (direct line: 020
7066 5104 / email: paul.ullah@fca.org.uk).
ANNEX A
REGULATORY PROVISIONS RELEVANT TO THIS FINAL NOTICE
The Payment Services Regulations 2017 (as in force from 13 January 2018)
1.1
By Regulation 9(7) and Regulation 15 of the PSRs 2017, if the Authority
proposes to refuse an application for registration it must give the applicant a
warning notice.
1.2
Regulation 13(1) requires an application for registration as a small payment
institution to contain, or be accompanied by, the information required by the
Authority.
1.3
Regulation 13(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.
1.4
Regulation 14(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 (11) are not met.
1.5
Regulation 14(6) 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”.
1.6
Regulation 14(7) states that “the applicant must satisfy the Authority that:
1.7
where the applicant is a body corporate, the directors;
1.8
the persons responsible for the management of the institution; and
1.9
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”.
1.7
Regulation 37(1) states that “Where it becomes apparent to an authorised
payment institution or a small payment institution that there is, or is likely to
be, a significant change in circumstances which is relevant to… in the case of a
small payment institution, its fulfilment of any of the conditions set out in
regulation 14(5) to (11) (conditions for registration as a small payment
institution).
1.8
Schedule 6, Part 1 (10) states that Part 26 of the Act applies save for the
modifications detailed.
The Payment Services Regulations 2009 (as amended by the Payment Services
Regulations 2012) (as in force between 1 October 2012 and 12 January 2018)
1.9
Regulation 13 stated that the Authority might refuse to register an applicant
as a small payment institution only if any of the conditions set out in paragraphs
(2) to (6) was not met.
1.10
Paragraph 13(4A) provided: “Where the applicant is a partnership, am
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”.
1.11
Paragraph 13 (4B) provided: “The applicant must satisfy the [Authority] that:
1.11.1
where the applicant is a body corporate, the directors;
1.11.2
the persons responsible for the management of the institution; and
1.11.3
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”.
1.12 Regulation 32(1) provided: “Where it becomes apparent to a small payment
institution that there is, or is likely to be, a significant change in circumstances
which is relevant to ... its fulfilment of any of the conditions set out in regulation
(4) to (6) ... it must provide the Authority with details of the change without
undue delay .. “.
“Payment Services and Electronic Money - Our Approach. The FCA ‘s role under
the Payment Services Regulations 2017 and the Electronic Money Regulations
2011” (the “Current Approach Document”)
1.13
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 published in July 2018.
1.14
The paragraphs relevant to the refusal of the Application are set out below.
Chapter 3: Authorisation and registration
1.15
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 published in July 2018.
1.16
The paragraphs relevant to the proposal to refuse the Application are set out
below.
1.17
Paragraphs 3.90 to 3.99 and 3.128 to 3.129 set out guidance on Regulation
14(6). These paragraphs state (amongst other things) that the FCA considers
fitness and propriety for the purposes of Regulation 14(6) to incorporate the
following essential factors, namely the (i) honesty, integrity and reputation (ii)
competence and capability and (iii) financial soundness of the person with a
qualifying holding having regard to the need to ensure the sound and prudent
management of a payment institution.
1.18
Paragraph 3.98 of the Approach Document identifies examples of factors that
the FCA will consider when assessing the honesty, integrity and reputation of
a controller. These factors include whether the person has been candid and
truthful in all their dealings with any regulatory body and whether the person
demonstrates a readiness and willingness to comply with the standards of the
regulatory system and with other legal, regulatory and professional
requirements and standards.
1.19
Paragraph 3.111 of the Approach Document makes clear that the FCA takes
the non-disclosure of material facts very seriously as it is seen as evidence of
current dishonesty.
1.20
In paragraph 3.107 of the Approach Document 2018, it is explained that
matters that the Authority will have regard to when considering honesty,
integrity and reputation include (but are not limited to) involvement in relevant
criminal proceedings or ongoing investigations, relevant civil cases and
relevant disciplinary action. It is explained that “relevant” matters will include
offences under legislation relating to companies, financial services, money
laundering or misconduct (paragraph 3.109) and that each application is
considered on a case-by-case basis (paragraph 3.110).
1.21
Paragraph 3.130 sets out guidance on Regulation 14(7). This paragraph states
that in its assessment of whether a director is of good repute, the Authority
will consider the same essential factors relating to fitness and propriety set out
in paragraphs 3.90 to 3.99 in relation to controllers.
Chapter 4: Change in circumstances of authorisation or registration
1.22
Paragraph 4.8 states that there is a general requirement where it becomes
apparent to a PI or EMI that there is, or is likely to be, a significant change in
circumstances, which is relevant to its fulfilment of the conditions for
authorisation or registration, the PI or EMI must provide us with details of the
change without undue delay.
1.23
Paragraph 4.32 states that it is a condition of authorisation and registration
that anyone with a qualifying holding in an authorised or small EMI or PI must
be a ‘fit and proper’ person. It states that we expect to be notify us if there are
or will be significant changes likely to affect these conditions without undue
delay.
1.24
Paragraph 4.36 states that PIs must notify the FCA of any changes in the details
of existing PSD Individuals, including matters relating to fitness and propriety.
It indicates how the firm should notify of these changes via the Notification of
changes to PSD Individual’ form.
1.25
Paragraph 4.40 provided guidance regarding changes affecting the fitness and
propriety of individuals. When a PI becomes aware of information that may
have an impact on the fit and proper condition applying to ‘directors/persons
responsible’ for management of the PI and its payment services, the PI should
notify us using the ‘Notification of changes to PSD individual’ form. The FCA
will then assess the information against the fitness and propriety requirements
previously described before notifying the PI of the action the FCA intends to
take.
“The FCA’s role under the Payment Services Regulations 2009 – Our Approach”
– June 2013 (the “Previous Approach Document”)
1.26
The paragraphs of the Previous Approach Document relevant to the decision to
refuse the Application are set out below.
Chapter 3: Authorisation and registration
1.27
Guidance regarding those factors relevant to the Authority’s assessment of
fitness and propriety included (in paragraph 3.126) examples of the matters
relevant to the assessment of honesty, integrity and reputation, including:
i)
Whether the person had been investigated for any criminal offence;
ii)
Whether the person had been the subject of any existing or previous
investigation or disciplinary proceedings, including by government bodies
or agencies (such as HMRC), and
iii) Whether the person had been the subject of any adverse finding in civil
proceedings, including any findings by government bodies or agencies
(such as HMRC).
1.28
Paragraph 3.127 stated that ‘relevant’ matters for these purposes included
offences under legislation relating to financial services and money laundering.
Chapter 4: Changes in circumstances of authorisation or registration
1.29
Paragraph 4.7 states that “The general requirement is that where it becomes
apparent to a PI that there is, or is likely to be, a significant change in
circumstances, which is relevant to its fulfilment of the conditions for
authorisation or registration, it must provide us with details of the change
without undue delay. We would generally consider ‘without undue delay’ to
mean within 28 days of the change occurring at the latest”.
1.30
Paragraph 4.20 states “A PI must also notify us of any changes in the details
of existing PSD individuals, such as name changes and matters relating to
fitness and propriety. It should do this using the ‘Notification of changes to PSD
individual’ form”.
1.31
Paragraph 4.24 provides additional guidance, stating ‘Where a PI becomes
aware of information that may have an impact on the fit and proper condition
applying to directors and persons responsible for management of the payment
institution and its payment services activities it should notify us using the
‘Notification of changes to PSD individual’ form. We will examine the
information, assess it against the fitness and propriety requirements previously
explained, and notify the PI of the action that we intend to take.
ANNEX B
REPRESNETATIONS
1.1
Transway’s representations (in italics), and the Authority’s conclusions in
respect of them, are set out below.
Burden of proof
1.2
The burden of proof is not on Transway or Mr Singer; Mr Singer should be
presumed to be fit and proper and of good repute unless the evidence positively
establishes the converse.
1.3
Regulation 14(6) and (7) of the PSRs 2017 (set out in Annex A), respectively,
require the applicant to satisfy the Authority that persons having a qualifying
holding in it are fit and proper and that the directors and the persons
responsible for its management are of good repute. Accordingly, the burden of
proof lies with Transway to demonstrate these matters to the satisfaction of
the Authority. For the reasons set out in this Notice, it has not done so.
Lack of substance or seriousness to the matters not disclosed
1.4
The search of Transway’s premises by the police did not result in any criminal
charges against Mr Singer or Transway. Mr Singer’s attendance at his police
interview was voluntary and the police have confirmed that he was never
subject to a “full” investigation, and the Authority has accepted that neither Mr
Singer nor Transway was the focus of the investigation. At no point during the
process did Mr Singer feel he was in danger of criminal charges being brought
against him. The civil forfeiture proceedings did not allege misconduct on
Transway’s (or Mr Singer’s) part. They were misconceived and ultimately
dropped as soon as Transway provided the police with evidence.
1.5
The criticisms of Transway made by HMRC did not allege deliberate misconduct,
and Mr Singer, on behalf of Transway, took remedial steps to address the issues
raised. On subsequent visits in 2013 and 2014, HMRC assessed Transway’s
procedures as satisfactory in other respects.
1.6
In the light of the position as set out in paragraphs 4 and 5 above, Mr Singer
did not appreciate that there was anything relating to the criminal
investigation, the civil forfeiture proceedings or the HMRC criticisms or fine that
meant the information previously provided in the course of Transway’s 2013
application for re-registration was now inaccurate, or otherwise that these
matters required disclosure. He cannot now recall whether he considered the
question whether there was anything to disclose in relation to the criminal
investigation and the civil forfeiture proceedings, but his feeling that he was
innocent caused him to think that these matters were not really anything to do
with him.
1.7
The Authority’s conclusion that Mr Singer is not fit and proper, or of good
repute, is based on his failure to disclose relevant matters to the Authority on
behalf of Transway. The Authority does not allege any criminal wrongdoing by
Mr Singer or Transway. It is immaterial whether or not criminal charges were
brought, whether or not the civil forfeiture proceedings against Transway
ultimately succeeded, and whether or not HMRC alleged deliberate misconduct,
or has ongoing concerns about Transway. The relevant events were serious,
and fell squarely within the scope of matters which ought to have been
disclosed by Transway to the Authority, but Mr Singer did not do so on
Transway’s behalf, either at the time they happened or in the course of the
Application, in response first to clear questions in the Application Form and
then to a specific enquiry by a member of the Authority’s Authorisations team.
Further, the Authority notes that Mr Singer completed the Application Form and
responded to the Authority’s enquiry at a stage when the civil forfeiture
proceedings were still ongoing; the proceedings themselves, and the
investigation which gave rise to them would therefore have been at the
forefront of Mr Singer’s mind.
The criminal investigation arguably did not require disclosure
1.8
The police have confirmed that Mr Singer and Transway were never subject to
a “full” investigation and the Authority has accepted that they were not the
focus of the investigation. It is therefore arguable that they were not “the
subject of” a criminal investigation, and that their involvement in the
investigation accordingly did not require disclosure, because it did not render
inaccurate the answer “no” to the following questions on the PSD Individual
Form: “Has the PSD individual ever been the subject of a criminal
investigation?” and “Has any firm at which the PSD individual holds or has held
a position of influence ever ... been the subject of any criminal investigation?”.
1.9
As Transway’s premises were searched, with documents and materials seized,
and Mr Singer was interviewed under caution by the police (albeit voluntarily),
the Authority does not accept that neither Mr Singer nor Transway was the
subject of a criminal investigation, albeit it may not have been a “full”
investigation and they were not the focus of the investigation. Accordingly, it
considers that the investigation ought to have been disclosed by Mr Singer on
Transway’s behalf (especially in the light of the stress laid on the importance
of full disclosure in the Current Approach Document and the Previous Approach
Document). In any event, even if it were the case that the investigation would
not have fallen to be disclosed on its own, Transway and Mr Singer do not
dispute that the search and the forfeiture proceedings arising out of it should
have been disclosed, and a disclosure of these would inevitably have
necessitated an explanation of the investigation itself. They also do not dispute
that he should have disclosed, on Transway’s behalf, the HMRC criticisms and
subsequent fine. The Authority considers that, taken together, these matters
amount to serious non-disclosures.
The non-disclosures were a mistake from Mr Singer has learned, and it
would be disproportionate to refuse the Application
1.10
Mr Singer does not come from a background in payment services or regulation.
His payment services business began at a time when the industry was not
regulated apart from a requirement for registration with HMRC in relation to
money laundering. He did, however, retain the services of compliance
consultants to provide on-site assistance to Transway for one hour per month
from 2013 onwards.
1.11
Mr Singer completed both the 2013 re-registration application and the
Application with the guidance of the compliance consultants, who were aware
of the cash forfeiture issue at the time of the Application. Notwithstanding this,
Mr Singer accepts he must take responsibility on behalf of Transway for the
failures, although the involvement of the consultants should be regarded as a
mitigating factor. The Application Form did not repeat the questions from the
PSD Individual Form and Mr Singer did not think to check the answers given in
the latter and consider whether they should be updated.
1.12
Mr Singer has learned a lesson from these proceedings. He is very sorry for his
misjudgement and now understands the need to be more scrupulous in
responding to questions from the Authority. He is willing to go on training
courses to improve his knowledge of Authority requirements, especially in
relation to small payment institutions, including disclosure requirements. He is
a man of good character, as attested to in a number of statements from
character witnesses, which he has produced.
1.13
The refusal of the Application would put an end to a part of Mr Singer’s
livelihood. It would be disproportionate to refuse the Application.
1.14
A background outside payment services and regulation does not excuse Mr
Singer’s failure to understand the requirements on a firm engaged in payment
services, including the obligation to make disclosure to the Authority as
necessary on an ongoing basis, and to answer the disclosure questions fully
and accurately. The Authority notes that Transway accepts that the role of
compliance consultants in dealing with the Application does not excuse its
failures and the Authority considers that it does not mitigate those failures
either: the responsibility to make appropriate disclosure was Mr Singer’s on
behalf of Transway, and he was aware of the questions in the course of the
Application and of the matters which should have been disclosed. The questions
were clear in referring to answers previously given by Transway, and Mr Singer
failed to review those answers on Transway’s behalf to verify their ongoing
accuracy and to make the appropriate disclosures.
1.15
The Authority has made no finding that Mr Singer is not of good character and
notes Mr Singer’s expressions of regret and his willingness to take steps to
improve his lack of competence and capability (although it notes that, to date,
it appears he has taken no actual steps in relation to training courses).
However, the Authority must consider whether it is satisfied that Mr Singer is
fit and proper, and of good repute, at the current time. For the reasons set out
in this Notice, it is not so satisfied (although it would be open to Transway to
seek to satisfy the Authority of those matters, should it wish to make a new
application for registration as a small payment institution at any point in the
future).
1.16
As the Authority, for the reasons set out in this Notice, is not satisfied that Mr
Singer is fit and proper, or of good repute, it does not consider it would be
disproportionate to refuse the Application, and considers that it is appropriate
to do so.