On the 21st April 2022, the Financial Conduct Authority issued a press release regarding criminal proceedings against QPay Europe Ltd at Westminster Magistrate’s Court. QPay, a fintech start up firm offering due diligence and underwriting services, initially applied for regulation by the FCA in March 2020, however has now withdrawn their application for regulation. The firm received money as an alleged investment from another company named Fintech International Q Software WLL. The FCA became concerned when QPay were observed moving money repeatedly to different bank accounts in several countries for no legitimate business purpose. The movement of money between several bank accounts in several different countries raised concern as a technique often employed by criminals to disguise the origin of criminal proceeds to appear from a legitimate source as well as weaken the connection between the money and criminals by making the money harder to trace. In response to this suspicious movement of money, the FCA froze the accounts in October and December 2020 in urgent proceedings, having linked the money from Fintech International to an alleged conspiracy to commit wire fraud in the United States.
The wire fraud conspiracy in the United States has led to the charging of four people in connection with a company named Allied Wallet. The company acted as an intermediary between businesses and financial institutions. This enabled Allied Wallet to accept card payments from major payment card issuers and allowing those who had been terminated for compliance concerns and those involved in criminal activity to access and benefit from online financial institutions and their services. The scheme set out to defraud card issuers by knowingly misrepresenting the types of transactions processed and the true identities of the businesses, using shell companies to falsely categorise the nature of the transactions. Through this misrepresentation and by encouraging card issuers to provide services for those in prohibited or high risk transactions and those who had been terminated for fraud or compliance concerns, the conspiracy defrauded card issuers of $150 million.
The FCA has not alleged involvement on the part of QPay in this conspiracy, but claimed the money acquired by QPay originated from the conspiracy and began proceedings under the Proceeds of Crime Act 2002 to recover the amount using an account forfeiture order. QPay has consented to pay the £2 million held in its name following the proceedings brought by the FCA to the UK government in order to further investigation into alleged financial crime.
Written by Charlotte Read