Nvayo Limited v The Financial Conduct Authority

In line with the framework suggested by the authorities referred to in Sussex the first question is whether there is a case to answer. This question was not pressed in Mr Auld’s oral submissions which focussed on the key second stage of whether there was a significant risk posed by granting a suspension beyond that of a broadly compliant firm and the third stage of whether in the overall balancing the suspension should be granted. (As regards the submission embedded in Mr Jacklin’s second witness statement that there was no case to answer because the AML deficiencies alleged in the FSSN were not serious enough to warrant the requirements imposed then I disagree with the analysis for the reasons set out below at [64]).

As regards identifying the persons intended to be protected by the notice, whereas Mr Auld’s submissions spoke mainly to Nvayo’s existing and future consumers, the Authority’s case was that, to the extent the supervisory notices concerned AML failings, the notices were intended to protect those who were intended to be protected by the MLRs namely the general public. As Mr Temple pointed out, that was in accordance with how the UT approached the issue in Gidiplus v FCA [2022] UKUT 00043 (TCC) (at [25]), a case where the decision notice was issued with the intention of protecting against AML risk. The UT accepted the Authority’s submission that the persons intended to be protected were the public in general, and “in particular potential victims of criminal activity which may be facilitated or incentivised by a criminal’s ability to launder money”. The UT also referred to “the integrity of the UK financial system, in preventing it from being used to launder money”.

Taking account that the analysis on who is sought to be protected may shift focus depending on the relevant requirement I will consider each requirement in turn acknowledging that there is a certain amount of overlap in the issues and concerns raised.

In the Authority’s submission prejudice would arise as follows if the new business requirement were suspended thus allowing Nvayo to transact with new customers. Firstly, allowing business to resume without any restriction would undermine the statutory scheme. That required those holding qualifying holdings to be fit and proper. Secondly, given the imminent withdrawal of Nvayo’s banking facilities, new customers would suffer prejudice if they paid money to a firm who would shortly have to reimburse them unless the firm could obtain new banking facilities. Thirdly, Nvayo’s lack of robust AML procedures prejudices the public at large and the integrity of the payment system.

Nvayo disagree that any of the above issues present a significant risk. Regarding Mr Scanlon being Nvayo’s UBO and the charges against him, Mr Scanlon is presumed innocent. The charges against him did not concern his conduct as regards Nvayo, and in any case could well be dropped. He has since May 2023 played no management role with Nvayo, his access to Nvayo’s systems was stopped, and a sale of his interest is in prospect. The issue with the safeguarding bank account only arose in the first place because of the Authority’s actions. Nvayo is confident they can resolve matters with the Bank given any issue the Bank has with Mr Scanlon being the UBO will be addressed when his interest is sold. The AML remediation has been put in place, and the issues the Authority have raised with the client file review were not fundamental as the Authority maintain but administrative in nature. There is no reason why with a Skilled Person (whose appointment is anticipated to be agreed shortly) in place why Nvayo should not continue to take on new business.

The first point to address is the significance of Mr Scanlon’s arrest and the criminal complaint brought against him. Nvayo’s submissions seek to distance the alleged conduct from Nvayo’s activities in the UK: the conduct related to former PMA Group and the period of complaint did not go beyond 2019 but largely concerned periods prior to Nvayo’s business starting back up in 2018. Nvayo thus argues the complaint “with exception of any continuing involving of Mr Scanlon himself in Nvayo’s business, [has] no relevance to Nvayo or the UK”.

There is, rightly, no dispute that conduct referred to in the USDoJ complaint are at this point unproven allegations. However, looking at the complaint in its own terms, I consider it is wrong to downplay its relevance to Nvayo’s business and Mr Scanlon’s continuing status as UBO of Nvayo. As Mr Temple’s submissions highlighted, the criminal complaint did refer to particular instances involving Nvayo. The complaint mentions a series of transactions undertaken for an Aurae Lifestyle customer in or around June 2019. Earlier, the complaint alleges that the AU Entities used various bank accounts to provide money transmitting services to their customers without properly registering with the relevant US regulatory body, FinCen. The example is given of a customer, referred to as “Customer-2”, wiring approximately $3.5 million to an account controlled by the AU Entities for the purpose of purchasing bitcoin. The complaint mentions the customer had a previous 2001 conviction for wire fraud and had more recently settled a Ponzi-related civil enforcement action with the SEC in 2023 in relation to violations occurring between 2015 and 2017. Mr Scanlon is said to have instructed several AU Entity employees “including the Financial Controller of Nvayo Ltd. (the “Nvayo Controller”)”, to wire money to through various Bank accounts to complete the transaction. It is said that “The Nvayo Controller later emailed Scanlon to confirm that a payment request of $2.6 million from Nvayo to Bank-2 had been requested”. Read on its own terms it is not possible to say the conduct alleged to have taken place does not involve Nvayo.

Mr Auld argues that to the extent any of this presented a risk to Nvayo’s new potential customers then that risk was dealt with by Mr Scanlon’s removal from any management involvement in the business back in May 2023. I agree with the Authority however that these steps did not address Mr Scanlon’s continuing status as UBO. Mr Temple was right to emphasise that the statutory scheme under the EMRs (analogous to the “controllers” regime under Part XII FSMA) envisages that owners, by virtue of their role as such, are expected to be fit and proper. Mr Scanlon, as owner, continues to have all the rights that status brings. The fact an owner is not involved in the management of the business does not divest them of their status as owner. In fact, it can be seen that the EMRs (see [7] above) specifically distinguish, on the one hand “the directors and persons responsible for the management of its electronic money and payment services business” from those with qualifying holdings on the other. Consumers, including potential consumers, of e-money institutions ought rightly to expect, given the regulatory framework which surrounds such institutions, that a firm they transact with is trading in a “broadly compliant manner”. That would include the reassurance that the business’s owner has been assessed to be fit and proper.

Nvayo’s arguments that a sale of Mr Scanlon’s interest is imminent, do not in my view provide sufficient comfort. Nvayo’s skeleton (filed on 9 January 2023) expressed the understanding that a sale would be completed by the date of the hearing (17 January 2023) but that proved not to be the case. In his oral submissions Mr Auld said that Nvayo’s solicitors, Trowers & Hamlin LLP, were instructed by AU Card LLC on the sale (which would effect the disposal of Mr Scanlon’s interest in Nvayo) and that the change of control notice had been drafted. (He also clarified the sale would not involve a right to repurchase – something which had been a source of concern to the Authority). Nevertheless, and putting aside the lack of evidence put forward on these matters, the fact remains that as things stand, the sale is yet to be finalised. Mr Scanlon remains the UBO. Moreover, as the Authority reminds the Tribunal, any sale would be subject to any new owner being cleared by the Authority as fit and proper.

Mr Auld also indicated in submissions that Nvayo’s legal team understood that the USDoJ and Mr Scanlon’s lawyers were presently discussing whether there was (or was ever) any proper basis for the US charges and that there were discussions on dropping the charges altogether. Again, putting aside the lack of evidence in relation to this, as things stand at present, the US charges remain.

Mr Auld emphasises the matters in the criminal complaint are accusations not facts. The Authority rightly acknowledge the presumption of innocence and do not suggest the facts alleged in the complaint are proven. The Authority does however point out that Nvayo, in its solicitors’ letter of 17 October 2023 to the Authority recognised that:

“if Nvayo was submitting a new application for authorisation as an EMI (or a change in control notification in respect of [Mr Scanlon] becoming a UBO), both would likely be rejected by the FCA.

…Furthermore, Nvayo has always recognised that it would need to assess [Mr Scanlon’s] position once the disposition and outcome of the U.S. charges was known. As the matter stands at present, the Nvayo board would likely conclude that [Mr Scanlon] is no longer suitable to be its UBO.”

The fact that the US charges remain to be determined should not be overlooked. But the nature of the criminal allegations are serious, and their context - money transmission - relates directly to the same type of business as carried out by Nvayo, and on some points specifically refers to Nvayo. Potential Nvayo customers and the public more generally would rightly be concerned if a firm ultimately owned by a person who remained subject to serious criminal allegations, relevant to the business type of the firm, could still take on new clients without any restriction.

It should also be noted that the relevant restriction on carrying out new business is not expressed in absolute terms. Incorporated within the requirement is a provision that Nvayo’s activities may recommence when, amongst other matters, the Authority’s concerns around Mr Scanlon being the UBO have been adequately mitigated. There is thus already recognition of the potential for the situation to evolve.

Another significant factor to consider in assessing whether consumers are not prejudiced by a suspension is the notification of withdrawal of service by Nvayo’s last remaining bank account provider. The account will, pursuant to that notification, close on 28 March 2024. Prejudice would arise to the new customers who put their money into an account that would have to be closed and returned in short order. (The Authority also points out under Regulations 2 and 51 of the PSRs Nvayo must give payment services users two months’ notice of termination of its contracts.) In the absence of any alternative bank offering the required safeguarding facilities the relevant focus shifts to assessing the prospect of the sole present safeguarding account with the Bank being retained. Mr Auld submitted, on behalf of Nvayo, that it was confident the Bank could be persuaded not to close the account.

There appears to me at present, however, no firm foundation for that confidence. The Bank advanced three reasons for closing the account (see [20]). Putting aside the Authority’s requirements, the other two reasons the Bank referred to appear no closer to being resolved. As indicated above, Mr Scanlon remains as UBO and as things stand there is no firm indication as to when he will be able to divest his ownership. While I was told Nvayo had legal opinions addressing the Bank’s concern (that reverse solicitation of customers raised EU regulatory licence issues) it was not clear to me what exactly had been provided to the Bank since 22 December 2023, that would not have been apparent earlier, or that whatever would now be provided would be sufficiently persuasive to assuage Bank’s concerns and get it to reverse its stance.

Nvayo argue the Authority should not be able to rely on the bank account difficulties when it was the Authority’s actions in imposing the supervisory requirements which precipitated those difficulties. However, as Mr Temple pointed out, the supervisory requirements represented only one of the three reasons for the Bank’s notice of closure. Also, at this stage of the Rule 5(5) analysis, the tribunal is not concerned whether the Bank are right to adopt the stance they have, or who was responsible for them adopting that stance. It is the fact that the Bank have adopted such position, and the likely prejudice that will cause to consumers (in terms of the lack of ability to fulfil the required safeguarding of client funds) if the taking on of new business were to be resumed that is relevant.

In view of the combined concerns regarding the UBO and the bank account I am not satisfied the persons intended to be protected by the notice under Rule 5(5)(a) (who include future consumers of the firm) would not be prejudiced if the requirement were to be suspended and new business were to resume. This is not a situation where no significant risk arises because Nvayo would be able to take on business in a broadly compliant way. Its UBO, who has had serious criminal allegations made against him remains as UBO, and in addition the only remaining safeguarding bank account is set to close with no reasonable certainty at this point that that concern will be reversed or addressed by alternative means of safeguarding. (As the effect on such persons intended to be protected (under Rule 5(5)(a) is reason enough to not be satisfied, I do not address the Authority’s further concern that granting a suspension would prejudice the smooth operation and integrity of market (Rule 5(5)(b))).

As regards Nvayo’s arguments that the Authority’s AML concerns do not justify the restriction on taking on new business I am not persuaded those are made good on the basis of the evidence as explained below. Nvayo also argued that the presence of the Skilled Person would address any concerns but that argument, putting aside that the Skilled Person has not been appointed as at the date of the hearing, is premature. The Skilled Person’s review, once completed, and crucially once the recommendations had been implemented, ought to give rise to a situation where any AML systems and controls concerns impacting on the taking on of new business are mitigated. But the mere presence of the Skilled Person in the business while their review is in progress would not address any concerns that remained in the interim pending the finalisation of the Skilled Person’s review and the implementation of their recommendations. It also would not, in any case, address the prejudice in terms of the UBO not changing and the concern regarding the last safeguarding bank account closing.

The effect of the requirements now imposed on the firm’s existing business, mean customers can only get the money in their account back with the supervision of a Skilled Person. In the light of AML deficiencies, the Authority consider that payouts to existing persons, but without the supervision of a Skilled Person, would risk payments which facilitate financial crime.

In his evidence, Mr Jacklin spoke to the detrimental impact and frustration this restriction had on Nvayo’s customers in terms of their being able to access their accounts as they would normally expect and the knock-on effect to Nvayo’s relationship with its customers. The exception that redemptions could be made with the supervision of a Skilled Person did not in his view address that concern because of the delay that would involve.

I do not doubt that these are genuine concerns which are felt by Nvayo and its existing customers but at this stage of the analysis the particular question I must focus on is whether I can be satisfied that suspending the restriction on existing customer redemptions would not prejudice the persons intended to be protected. As discussed, in the context of AML risk, that constitutes the wider public.

The issue here is whether the evidence Nvayo have provided enables the tribunal to be satisfied that enabling customer redemptions without the supervision of the Skilled Person would not prejudice the concern of a risk that the payments had or would facilitate financial crime. To assess that evidence it is necessary to go into more detail into the Authority’s review of the ten client files which took place in October/November 2023 and which led to the issue of the FSSN.

As mentioned, the Authority requested 10 files for review. Nvayo duly provided these on 23 October 2023 which the Authority then assessed against the MLRs and Joint Money Laundering Steering Group Guidance in relation to risk assessments, due diligence, ongoing monitoring, transaction monitoring and suspicious activity reporting. The reviews for the ten customers were appended to the FSSN.

Before referring to some of the detail of those I should mention that I did not understand Nvayo to be arguing, at least for the purposes of this application, that the underlying factual information set out in the reviews was inaccurate. In other words, if the review maintained a particular document stated a particular thing, or that a document was not in the particular client file, it was not suggested to me that that was factually wrong. Rather Nvayo made various other points (considered below) querying the significance the Authority attached to the relevant points of non-compliance arguing they were essentially of an administrative nature and highlighting the limited scope of the review (both in terms of the numbers of files and the scope of information looked at) and therefore the wider inferences that could be drawn from it.

The Authority considered all ten files to be inadequate. A summary of the Authority’s findings (derived from the Authority’s Statement of Case), with reference to the relevant regulation in the MLRs is set out below.

The review explained the Authority was not able to assess the adequacy of transaction monitoring as there was no evidence of the relevant alerts in the ten files, nor was it able to assess adequacy of suspicious transaction reporting. But the Authority considered because of the Customer Due Diligence failings Nvayo might be unable properly to monitor for suspicious transactions. (In other words, without the basic context on the nature of the customer, their business and what they needed the account for it would be difficult to assess what counted as suspicious activity).

Mr Temple took me through the review conclusions of several client files to illustrate the serious nature of the concerns. In relation to one, a customer was designated a medium risk customer but with no rationale. There was no evidence on file of any risk assessment having been completed at onboarding or at any point during the customer relationship. In relation to another it was noted, despite the information suggesting the individual was based in a country designated as high risk under Schedule 3ZA of the MLRs, that there was no rationale on file as to the impact of that on the risk score and why the risk rating remained medium. Mr Temple also pointed out in relation to one of the files that it had been noted that the Enhanced Due Diligence document had been completed by Mr Scanlon and that he had originally rated the customer medium risk, but the MLRO had upgraded it to high risk.

According to the review another customer, designated originally as medium risk, was then moved to high risk but there was not then any detail of the customer’s occupation, position or income, though there was some evidence of screening using ComplyAdvantage. It is said that a simple Google search on the customer’s name and location showed the customer operated in a high risk sector and that their business was the subject of an investor warning in 2018 by a financial regulator. The review said that no evidence of Enhanced Due Diligence, SoF or SoW was put forward (the document put forward as a SoF – a bank statement did not explain the source of the funds).

Nvayo’s overall response is that it does have the required AML frameworks in place and that it does comply with the relevant obligations. It submits the alleged failings were administrative in nature and posed no risk to ongoing customers. As explained in Mr Jacklin’s second witness statement Nvayo’s solicitors responded to the Authority’s letter of 16 November 2023 feeding back on the review and making representations on the FSSN on 13 December 2023. Referring to that he goes on say that “accordingly Nvayo believes that the failings relied upon by the FCA are not as serious as stated in the FSSN and the Feedback Letter.” The letter included the following:

“Nvayo believes that the conclusions reached in the FSSN do not fully represent the present position and that additional information had been provided to the FCA on policies risk scoring and risk assessments, including Nvayo’s approach to conducting risk scoring, the consequential updates to risk assessments and ongoing remediation of client files. In the light of the additional context, Nvayo believes that the failings are not as serious as stated in the FSSN”

“This also applies to actual evidence that has been obtained and or retained by Nvayo in respect to individual clients. Deficiencies identified by the FCA in the FSSN have explanations and/or have not taken into account the requirements detailed in Nvayo's policies technical solutions deployed during client due diligence, or other information that is held outside of the actual client files by Nvayo and not explicitly requested by the FCA during the review of client files.”

In addition, Mr Jacklin raised the following points:

Nvayo also responded to the criticisms levelled by the Authority’s review through Mr Auld’s oral submissions. He submitted, all customers were risk rated, there had been an updated enhancement to the risk score card following advice from independent advisers. The AML and PEP screening parameters had been provided by ComplyAdvantage, an independent provider of financial advice. Ongoing monitoring is provided by ComplyAdvantage and all customer documents are electronically certified through Jumio. Mr Auld also referred to the progress of the appointment of Skilled Person process. A shortlist of potential candidates had been drawn up one of whom was on the Authority’s panel. Terms of reference could be drawn up in a matter of days and then the initial review of 4 weeks could start and then any remediation addressed. With the Skilled Person in place to establish the relevant facts there was no reason not to pay customers their money.

As already identified, in this context of AML, the persons intended to be protected by the Authority’s notices are the public. A risk of facilitation of financial crime arises where checks and monitoring that ought to have been carried out to stop someone opening or using an account were not properly carried out. The concern is, for instance, that individuals whose identities were not verified, or who ought to have their source of funds and wealth verified will receive repayment. For the purposes of this application, and the reasons set out below I consider that the matters raised in review of the ten client files show, on their face, that there are sufficient concerns with Nvayo’s AML compliance to justify customer redemptions only taking place with appropriate supervision by the Skilled Person. In agreement with Mr Temple, there is a lack of detailed evidence showing the AML concerns have been addressed.

It is true ten client files reviewed represent a tiny proportion of the total amount of clients, but the clients were selected as the top clients by transactional volume and/or value data Nvayo had provided. A risk-based approach, as Mr Jacklin’s statement indicates, is fundamental to the AML system. That such deficiencies arise in these top ten files might be considered of concern purely in terms of redemption for those particular customers given they will include amongst them the highest value clients. One might also accordingly expect that the top ten files would illustrate the high-water mark of Nvayo’s AML system and its implementation. However, the issues identified, which include lack of identity verification, and risk assessment and omitting to obtain information on source of funds and source of wealth are clearly fundamental. I reject the depiction of these deficiencies as merely administrative. The MLRs contain a number of requirements to carry out specified procedures and checks and obtain certain documents, which viewed in isolation and without context could be described as administrative, but they are no less significant because of that. The checks and assessments form the bedrock of the regime’s protection. I am also not persuaded by the argument that the deficiencies can be accounted for by the subjective nature of risk-based analysis. Even assuming that is correct, there are clearly risk issues which require no value judgment such as whether a particular country is designated in the MLRs as high-risk. The review indicates that even in matters involving no subjectivity something went wrong in Nvayo’s processes.

Nvayo argue the client files do not represent the whole of the picture and that there is information elsewhere in its systems which the Authority did not request (see [61]). However, in order to make good on this point it was incumbent on Nvayo to explain in its evidence before the tribunal how and where those gaps in compliance were filled. It ought not to have been an unduly onerous task to explain how other material not present on the client files relating to ten clients, or at the very least a sample of those, addressed the deficiencies.

Nvayo also refer to “additional information with respect of Nvayo’s policies, risk scoring, risk assessments, and ongoing remediation” which mean the AML failings are not as serious as stated. But it is not clear to me how further information on Nvayo’s policies will resolve the concerns which have arisen regarding the application of those policies in practice. The review findings concern an inconsistency of application of the AML regime rather than a complete lack of system or policies (the findings refer for instance the use of various compliance and screening tools and to a positive intervention by the MLRO). The review findings suggest something has gone wrong in the way the policy has been implemented in practice. It is also not explained in sufficient detail what additional information on risk scoring and risk assessments meant the failings were not as serious as made out.

As regards the evidence Nvayo has put forward regarding remediation this is also too high level and lacks the necessary detail. Mr Auld argued in reply that Nvayo should not have to give detailed evidence in an application for suspension producing a massive witness statement going through some 13000 accounts. I have already rejected the point that as a matter of principle detailed evidence is not called for (at [31] above) but the circumstances of this case illustrate that detailed evidence (which should of course be relevant evidence) does not necessarily equate to voluminous evidence. Such detailed relevant evidence might for instance have sought to demonstrate to the tribunal that Nvayo had put in place a system that would uncover the sorts of fundamental MLR compliance issues identified in the review, and which addressed any non-compliance before a customer payout was made.

Nvayo’s reference to the help it is getting from external providers also lacks detail and does not address the relevant concern. The file review of the ten clients refers to Nvayo using ComplyAdvantage and Jumio systems where it is clear they have been deployed as compliance tools with discrete functions. However, they quite clearly could not and did not address all of the relevant compliance obligations. Those required Nvayo’s interventions and oversight too. Ultimately the concern is that such evidence as there is, which is in very general terms, does not explain how the remediation work carried out by the independent compliance firms will provide the necessary reassurance that existing files will be checked for MLR compliance and remediated before any payout is made. Similarly, the fact a Skilled Person, once they are appointed, is carrying out a review will not address the specific concern that a customer would be paid out on a non-AML compliant file. Also, the fact that Mr Jacklin says the ten files that were reviewed were checked and found to contain no material error by another independent compliance specialist prior to submission of those files to the Authority, taken at face value, is a reason to approach the further claim that the involvement of such consultant in the remediation with caution rather than as a point in Nvayo’s favour.

In conclusion, in relation to this requirement, in the absence of sufficient evidence advanced by Nvayo, I am unable to be satisfied that the persons intended to be protected by the relevant Supervisory Notice (the public at large) would not be prejudiced if the requirement restricting the repayment to customers unless with the supervision of the Skilled Person, were to be suspended.

Nvayo also submit that, to the extent there were any AML concerns which would have been apparent earlier in February 2023, it is telling that the Authority did not at that point assert the consumer risks it now does or seek to impose the severe restrictions it has. Whether to take regulatory action and when are matters of discretion for the Authority and will be based on its own view of the facts. The particular question at this point in the Rule 5(5) analysis is whether the tribunal can be satisfied that no relevant prejudice would arise if a suspension would be granted. I am not persuaded the tribunal can draw any particular inference in relation to that from the Authority’s action or inaction at a given point of time. On a similar theme Mr Auld submitted as a general point that it must be the case that some regulatory matters will more appropriately dealt with by way of normal supervision or the involvement of a Skilled Person rather than the imposition of requirements. Again, that does not take the matter any further where, in a suspension application situation such as here, requirements, by definition, will already have been imposed.

The terms of this requirement are that Nvayo must not:

“without the prior written consent of the Authority, in any way dispose of, withdraw, transfer, deal with or diminish the value of any of its own assets”.

It is provided that the requirement may be lifted when:

“i)

The Authority’s concerns in respect of the UBO, such as are set out within the SSN and FSSN, have been adequately mitigated; and

ii)

[Nvayo] has remediated any systems and controls failings to the satisfaction of the Authority. The Authority’s findings will take into account any findings of the appointed Skilled Person.”

The requirement is subject to exceptions. It does not apply to “the disposal of assets made by [Nvayo] in the ordinary course of business, amounting to not more than £5000…and also does not apply to i) Usual and proper salary payments made by [Nvayo]; and ii) Payment of Nvayo’s legal fees made by Nvayo. (Footnote: ¹)

The requirement also specifies a list of payments that will not be regarded as payments in the ordinary course of business namely:

“i.

Payments of unusual or significant amounts to the [Nvayo]’s controllers, shareholders, directors, officers, employees or any connected persons.

ii.

The making of any capital distribution.

iii.

The making of any gift or loan by the Nvayo to any party.

iv.

Payments made as part of any financial restructuring or reorganisation of its business, of from the sale of any part of the [Nvayo]’s business (whether share or asset based).”

The Authority maintain an assets requirement will normally be imposed where there is a risk of the firm being wound down. Mr Temple explained that while the regulatory framework ensured that client money was safeguarded, the purpose of this assets requirement was to ensure as much money as possible remained to facilitate any wind down while allowing ordinary business expenses to be paid. The persons sought to be protected are thus existing accountholders who will want to be assured that should Nvayo wind down it will have the resources to effect the return of their funds. Nvayo argue the requirement is inappropriate, disproportionate and unnecessary. There has been no assets dissipation, nor is there any risk of asset dissipation.

I take account of the finding above to the effect there is no reasonable certainty at this point that the Bank will not, contrary to its notification, close Nvayo’s account on 28 March 2024. The implication of that would be that Nvayo would not be able to carry on in business (because it will be unable to comply with the relevant safeguarding obligations). I therefore agree with the Authority’s assessment of risk: despite Nvayo’s arguments that it can resolve the matter I conclude that there is an impending risk of wind-down. With that backdrop in mind, and particularly given the short timeframe in which the risk may materialise, I am unable to be satisfied that there would be no prejudice to existing consumers (who will expect sufficient funds to be available to administer an orderly return of their safeguarded funds) if the assets requirement were lifted. (While Mr Auld sought to argue the assets requirement was unfair by analogy with assets freezing orders in the courts, that analogy does not hold good for the reasons Mr Temple explained. These include that the dispute is between a regulated entity and its regulator as opposed to between two litigants and the assets are restricted for the benefit of consumers not for the party imposing the restrictions.)

Nvayo make a number of other points in support of suspension. None, however, are relevant to the question of satisfying the tribunal that there is no prejudice to the relevant persons sought to be protected if the suspension application were to be granted. The evidence given on the impacts on others such as employees and contractors and on the business’s worth if the requirements are not lifted, all fall into that category. Similarly, Mr Auld’s submissions emphasising Nvayo’s record of responsiveness and engagement with the Authority’s concerns, while of course are to be welcomed, do not address the specific risks at issue, for instance of pay-outs on files that are AML non-compliant.

Mr Auld also emphasised that the body of Nvayo’s customers is known, certain and confined. (This was based on the evidence Mr Jacklin gave regarding Nvayo’s customers having to already be members of affiliate companies, and the fact that Nvayo did not directly market its services or solicit customers.) But I do not see how the point assists Nvayo’s case. Insofar as there is an interest in protecting future consumers from the relevant risks (fitness and propriety concerns regarding the UBO and bank account closure) those risks are not mitigated because of the channel through which the customers have arrived to Nvayo. As regards AML risks there was nothing to suggest the filter of being pre-cleared as a member of the affiliate company’s program or a consumer of its concierge services would lessen the relevant AML risk as regards the customer coming to Nvayo.

Finally, Mr Auld also invited the tribunal to consider, to the extent there was any concern over the uncertainty of particular events happening such as the sale of Mr Scanlon’s interest, or retention of a bank account, whether an order for suspension could be granted but on a conditional basis. Putting aside whether an order drafted along such lines, which would effectively amount to the suspension of the suspension order would fall within the scope of the Rule 5(5) power, that did not seem to me to be necessary or desirable. As Mr Temple pointed out various contingencies are already catered for in the exceptions built into the requirements (which applied in essence where the Authority could be satisfied the relevant concerns it had could be met). Also, if it turns out that the issues which have stood in the way of a grant of suspension have been removed (but the Authority still disagree that justifies the requirements no longer applying or suspension of such requirements) it would remain open to Nvayo to make a fresh suspension application on the basis of the changed circumstances.

For the reasons above, I am unable to be satisfied that if the requirements considered were suspended, the interests of the relevant persons intended to be protected would not be prejudiced. The pre-condition for the exercise of the tribunal’s power to suspend under Rule 5(5) is not therefore met. (That conclusion also means that a proposal which Nvayo put in the alternative which agreed to certain other requirements regarding preservation of records, ring-fencing, and restrictions on unusual payments, but on the proviso the requirements relating to new and existing business was suspended is unviable.)

Nvayo’s suspension application is accordingly refused.