UT/2023/000092 - [2024] UKUT 00035 (TCC)

E-money is defined in the EMRs as monetary value, represented by a claim on the issuer, stored electronically (including magnetically), issued on receipt of funds for the purpose of making payment transactions, and which is accepted as a means of payment by someone other than the issuer.

Nvayo provides e-money and pre-paid cards. Nvayo’s customers can transfer their e-money to others or spend it, for instance, with a number of retailers who accept MasterCard payments. Nvayo is owned by AU Card Limited (a company incorporated in the UK), which is wholly owned by AU Card LLC (a company registered in the State of Utah, USA). AU Card LLC is in turn owned by PMA Media Group Inc. (a US company) in relation to which Mr Scanlon is the 100% shareholder. There is no dispute Mr Scanlon has a “qualifying holding” for the purposes of the fit and proper requirements contained within the EMRs, Regulation 6(5) and (6) of which provide, so far as relevant, as follows:

Regulation 7 of the EMRs enables the Authority to include such requirements as it considers appropriate when authorising the firm. Regulation 11, read in conjunction with Regulation 7, gives the basis for the Authority to impose subsequent requirements on a number of bases such as protection of consumers, including where:

“…it appears to the Authority that – (a) the person no longer meets, or is unlikely to continue to meet any of the conditions set out in regulation 6(4) to (8) or the requirement to maintain own funds, or does not inform the Authority of a major change in circumstances which is relevant to meeting those conditions or that requirement, (as required by regulation 37)”.

Regulation 20 of the EMRs requires the firm to safeguard clients’ funds. Nvayo does this using a segregated bank account (pursuant to Regulation 21 of the EMRs).

Nvayo is also subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“the MLRs”). In brief, these impose various requirements regarding rating the risk of money-laundering and terrorist financing, and customer due diligence (with enhanced due diligence in any case identified as high risk). The MLRs also impose ongoing obligations in relation to monitoring of transactions and suspicious activity reports.