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

The USDoJ’s criminal complaint, filed in the United States District Court (New Jersey) and made public at the time of Mr Scanlon’s arrest on 25 May 2023 alleges the defendant, Mr Scanlon, conspired to control and own an unlicensed money transmitting business in violation of US federal law from 2015 at the earliest to in or around 2019. The facts on which the complaint is based are set out in a 14-page affidavit sworn by a US Attorney’s Office official and detail a number of events taking place between Mr Scanlon and five customers of AU Card LLC (which did business under brands including “Aurae Lifestyle”). The affidavit refers to Nvayo as a company licensed in the UK to provide “e-money wallets on behalf of Aurae Lifestyle customers”. It sets out that Mr Scanlon “acted as the primary “relationship manager” (i.e., a customer service representative) for several high-net-worth customers of the “AU Entities” [PMA, AU Card LLC, AU Card Ltd. and Nvayo] operating under the Aurae Lifestyle brand.” It refers to the fact of various criminal and fraud charges, and in some cases convictions in the US, of such customers. It also refers to Mr Scanlon continuing to assist a particular customer with financial transactions despite Nvayo having relayed issues to its regulator in the UK in or around July 2019 regarding the customer. The customer, who is later said to have told Mr Scanlon that the customer was going to modify a source of funds letter that a lawyer had provided to him and then get that notarized, continued to conduct transactions through his account until February 2020.

The USDoJ’s complaint was not made public until 23 May 2023, but was preceded by an investigation in the US. It is a matter of dispute between the parties as to when Nvayo became aware of any issues with Mr Scanlon. Nvayo say they were not aware until 25 May 2023 whereas the Authority maintain Nvayo became aware from December 2019 when the US entities received information requests in relation to Nvayo clients and in any event from March 2021 when Nvayo became aware of a subpoena. It is not necessary for me to address the detail of that dispute for the purposes of resolving this suspension application. What is of more relevance to Nvayo’s case for present purposes are the actions Nvayo then took. Mr Scanlon was suspended as an employee and all access he had to Nvayo systems was removed. Nvayo’s notification letter of 30 May 2023 to the Authority mentioned Nvayo had always had an independent board formed of two directors: Mr Jacklin and Mr Amadeo Pellicce. On 7 August 2023, Nvayo’s solicitors told the Authority that Mr Scanlon had decided to dispose of his shares until such time as the US proceedings were resolved. As at the date of the hearing before me no sale had taken place.