FCA has published a supervisory notice sent to Dolfin Financial (UK) Limited in March. The requirements in the notice have now largely been cancelled as Dolfin entered special administration. FCA has also redacted parts of the notice as some named third parties have not had the opportunity to comment on relevant matters.
In summary, the firm operated schemes to enable its clients to obtain Tier 1 investor visas in breach of immigration rules and made false or misleading representations to the Home Office and FCA. FCA had concerns about many aspects of the firm’s business, including its financial crime controls. The business model was high risk, with many red flag relationships. The firm’s problems culminated in its (replacement) CEO resigning at short notice and its newly appointed MLRO being dismissed.
FCA had identified significant concerns in November 2019 as a result of which it invited the firm to apply for a VREQ restricting it from the Tier 1 visa business, which was agreed. However, an enforcement investigation was subsequently opened, which led to further findings about that business. Separately, an FCA review of the firm’s CASS arrangements found several weaknesses and longstanding errors, leading to FCA requiring a s166 review. This was followed 6 months later by a financial crime prevention review, which raised more concerns, and FCA inviting the firm to apply for a further VRAQ to cease all regulated activities and restrict its assets. The firm did not agree the VREQ and FCA did not persist, given actions the firm had taken and a proposed restructuring. However, it then required a s166 review to satisfy itself that the firm had taken appropriate remedial measures. The review identified many wide-ranging compliance issues.
As a result, FCA found breaches of Principles and the Threshold Conditions and urgently imposed requirements that the firm cease all regulated activities and that it should not accept any new client monies or custody assets or dispose of any assets. It also instructed the firm to notify all its clients and contacts of the imposition of the requirements.