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Warning Warning Warning

December 2021 Martin Woods

We need to be more proactive in the due diligence applied when undertaking or facilitating business with firms that appear to be engaged in business related to crypto assets or coins.

Earlier this month the Financial Conduct Authority (FCA) published details of 111 ‘crypto’ businesses operating in the UK and providing regulated financial services without being authorised to do so. Mark Steward, Head of Enforcement and Market Oversight at the FCA said,

“We have a number of firms that are clearly doing business in the UK without being registered with us and they are dealing with someone: banks, payment services firm, consumers,” he added. “This is a very real risk so we are worried about that.”

This is the third anti-fraud announcement in the prior three weeks, which indicates the FCA is firmly on the front foot against fraud. Their concerns clearly extend to fraud as well as unauthorised business within the crypto currency/asset sector. Once again, the alert came with a warning, not only to potential victims/investors, but also banks and other firms who may provide services or make payments to any of these 111 businesses.

Proactivity

The publication of this substantial list provides evidence of the ongoing, proactive screening and research being undertaken by the FCA, which has led to the identification of these particular businesses. Moreover, there is an expectation that regulated firms and banks will use the list and take action. Mark Steward has once again proposed FCA regulated banks and firms should be using this list and the bigger Warning List to ensure they are not undertaking any business with these firms.

Pursuant to this proactivity, I have used Kompli Global to look at the businesses, to identify common features, characteristics and characters. I was surprised to find connected businesses which had not featured in the list of 111 published by the FCA. In one instance I identified a company with a very similar name, essentially, the word ‘Group’ was inserted. This company was incorporated on the same day as the company named in the FCA list, registered at the same address and had identical directors.

One of the businesses included in presented upon the list of 111 published by the FCA on 22 June 2021 was actually dissolved on 26 January 2016. Of course, this does not mean rogue operators are not continuing to use the company name, but there may equally be some issues regarding the current status and the age of the FCA list.

The data and connections

Herewith a breakdown of the data Kompli-Global revealed.

  • 80 of the 111 businesses were UK incorporated entities and a further nine directly connected UK incorporated entities were identified, but do not feature upon the FCA list of 111.
  • 51 of the companies were registered or had previously been registered at three addresses, being:
    • 20-22 Wenlock Street London N1 7GU – 17 companies from the FCA list, as well as 4 additional and connected companies. Note, this is a multi-occupancy business address and there are currently in excess of 83,000 UK incorporated entities that have been or are presently registered at this address.
    • Kemp House, 160 City Road, London EC1V 2NX – 13 companies from the FCA list, as well as 4 additional and connected companies. Note, this is also a multi-occupancy business address and there are currently in excess of 60,000 UK incorporated entities that have been or are presently registered at this address.
    • 71-75 Shelton Street London WC2H 9JQ - 11 companies from the FCA list, as well as 1 additional and connected company. Note, this is also a multi-occupancy and virtual office business address and there are currently in excess of 74,000 UK incorporated entities that have been or are presently registered at this address.
  • One address featured yet again and is an address I have referenced in two prior articles related to the FCA Warning List, 12 Constance Street, London E16 2DB.
  • Two of the addresses have previously featured in major money laundering allegations/investigations:
    • Suite 1, 5 Percy Street, London W1T 1DG and 61 Bridge Street, Kingston, HR5 3DJ, which is a business accommodation address, with a shop front called Ghost Mail.

Thus, address data is an important factor within this dataset and banks/firms, may need to monitor such addresses going forward. Moreover, the FCA may need to adjust their research techniques in order to capture connected companies, which likely present a ‘very real risk’.

Above and beyond the 80 businesses, which were UK incorporated companies (71 from the FCA list of 111 + 9 from this research), there were likely many other UK incorporated companies which have been engaged in similar unauthorised business. Such evidence was presented by the research using Kompli Global,’s Kompli Konnect tool, because of the intuitive process applied when searching for a company, director, PSC or even corporate address. Specifically, when searching for a company, Kompli Konnect will present other companies with similar names or dissolved companies with the exact same name. Some of the names were the same and although the company which previously used the name was dissolved, 20 companies included in upon the list of 111 were also dissolved. Other relevant risk factors presented by Kompli Global:

  • Only 4 of the 80 companies were registered with the Data Commissioner’s Office (ICO).
  • Many of the companies had not provided full PSC data.
  • One of the companies had changed its name to a long number – which was not presented by the FCA.
  • The SIC business code for one of the companies in the FCA list of 111 was for banking.
  • It was not possible to find VAT registration for most of the companies.
  • Most of the companies submitted exempt accounts.

The concluding message

It’s all about data. We have been warned in more ways than one. The FCA and Mark Steward have ‘upped their game’ in the fight against fraud and firms operating without FCA authorisation. Banks and regulated firms must not undertake or facilitate business with these firms, which extends to making payments to and receiving payments from such firms. We are on notice, there are a lot of fraudulent, scam and unauthorised firms operating in the UK and there are concentrations at specific addresses.1 All of this presents a ‘very real risk’.

We need to be more proactive in the due diligence applied when undertaking or facilitating business with firms that appear to be engaged in business related to crypto assets or coins. Most of these firms have not registered with the ICO, in addition, it was not possible to find evidence of VAT registration for most of the companies. – All of which means missing data + missing registration = risk. In the event a firm is engaged in unauthorised business, they are also unlikely to have registered with the ICO. Kompli Global have aggregated the data and can help firms to respond to the warnings, identify the risks and ensure they do not undertake business with fraudsters, scammers and those engaged in unauthorised investment/financial services business.

  1. It does not mean all companies registered at these addresses is engaged in fraud, money laundering or unauthorised business. There will be lots of legitimate companies registered at these addresses. 

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Media Contacts

Martin Rutland
Kompli-Global Limited
pr@kompli-global.com
+44 (0) 776 8882 525

Scott Girling-Heathcote
SkyParlour
scott@skyparlour.com
+44 (0) 844 2939 764

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