Vladimir Consulting Limited (VCL) acted as a trader on peer-to-peer cryptocurrency trading platforms, and on this basis applied to be registered as a cryptoasset exchange provider under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs) in September 2020. In March 2022, the FCA issued a decision notice refusing VCL’s application and removing its temporary registration allowing it to operate as a cryptoasset exchange provider, on the basis that VCL had failed to comply with customer due diligence measures under the MLRs. In appealing to the Upper Tribunal (Tax and Chancery Chamber) (Tribunal), VCL sought to suspend the effect of this decision notice on the basis that it did not have a business relationship with its customers, and therefore only had to carry out customer due diligence measures for ‘occasional transactions’ of more than EUR 15,000.
The Tribunal rejected this argument, finding that VCL did have a business relationship as it sought to build customer loyalty and had repeat business from individual customers, and so ought to have applied customer due diligence to all customers. The Upper Tribunal agreed with the FCA that VCL had misapplied the MLRs, which was indicative of a lack of adequate skills and experience, and that it had not understood its role as a ‘gatekeeper’ of the anti-money laundering regime. The Upper Tribunal was not satisfied that VCL would carry on its business in a broadly compliant manner if the decision notice was suspended, and therefore dismissed VCL’s application.
Vladimir Consulting Limited v The Financial Conduct Authority UKUT 168 (TCC)
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