Key Facts
- •Nvayo Limited, an e-money institution, was issued three supervisory notices by the Financial Conduct Authority (FCA) due to the arrest of its ultimate beneficial owner (UBO) on money laundering charges and significant AML deficiencies.
- •The notices imposed immediate restrictions on Nvayo's new and existing business and its asset dealings.
- •Nvayo applied to the Upper Tribunal (UT) to suspend the effect of the notices pending a substantive hearing.
- •Nvayo argued the restrictions were disproportionate, citing the UBO's removal from management, an imminent share sale, unproven US charges, and sufficient steps taken to address AML issues.
- •The FCA countered that suspending the restrictions would prejudice consumer interests and the integrity of the financial system due to ongoing AML concerns and the impending closure of Nvayo's bank accounts.
Legal Principles
The UT can suspend the effect of a decision pending a reference if doing so would not prejudice the interests of protected persons, market integrity, or financial system stability.
Rule 5(5) of The Tribunal Procedure (Upper Tribunal) Rules 2008
The UT considers whether there is a case to answer, whether suspension would prejudice protected parties, and balances relevant factors to determine if suspension is just.
Sussex Independent Financial Advisers Limited v FCA [2019] UKUT 228 (TCC)
Applicants must provide detailed evidence demonstrating how their business will operate compliantly during the suspension period.
Gidiplus v FCA [2022] UKUT 00043 (TCC); Koksa (t/a Arcis) v FCA [2016] UKUT 192 (TCC)
In AML cases, 'persons intended to be protected' includes the general public and the integrity of the UK financial system.
Gidiplus v FCA [2022] UKUT 00043 (TCC)
EMRs require owners of e-money institutions to be fit and proper persons; involvement in management is distinct from ownership.
Electronic Money Regulations 2011, Regulation 6(5) and (6)
Outcomes
Nvayo's application to suspend the FCA's supervisory notices was refused.
The UT found that suspending the restrictions would prejudice consumer interests due to unresolved concerns about the UBO, the impending closure of Nvayo's bank accounts, and insufficient evidence of remediated AML deficiencies.