When Nvayo filed its most recent accounts on April 6, 2023, little distinguished the London-based payments company from the other 300 or so e-money firms then regulated in the UK — except, perhaps, rude financial health.
“Nvayo had an exceptionally strong performance in 2021,” its directors boasted in their annual statement, noting that turnover had more than doubled as the firm swung to a profit.
Two weeks later in Miami, Christopher Scanlon, the owner of Nvayo, was arrested. US authorities accused him of running an unlicensed money-transmitting business, between 2015 and 2019. It had helped unsavoury clients evade scrutiny as they moved hundreds of millions of dollars between banks and crypto accounts. He has denied any wrongdoing.
Multiple times the US Department of Justice name-checked Nvayo, which provided payments cards to clients of Scanlon-owned “lifestyle and concierge services” companies, alongside a company called Aurae. The Delaware-registered lifestyle brand offered “solid gold”, sometimes bejewelled, cards to clients.
The saga illustrates the “unacceptable risk” posed by payments companies that move billions through the UK. That risk had been flagged by the Financial Conduct Authority, which regulates the UK’s e-money providers, just a month before Scanlon’s arrest. It has raised questions about the ability of the FCA to oversee the digital payments sector, in which trillions of dollars change hands globally each year.
“I don’t think the FCA have got enough people or information to manage those firms,” said Ben Cooper, partner and head of the economic crime team at law firm TLT. If not for the US intervention, he added, there was no guarantee Nvayo would have registered on the FCA’s radar.
The FCA imposed severe restrictions on Nvayo in August after Scanlon’s arrest. In October the UK regulator separately announced they had found widespread shortcomings in Nvayo’s money-laundering controls. The firm, which is fighting FCA-imposed restrictions and denies any wrongdoing, is at risk of “impending wind-down” according to a UK legal ruling last month.
The FCA, whose remit extends to supervising around 45,000 firms, said that like “all regulators or enforcement agencies the world over, we are supported in our work by tip-offs, complaints and other information.”
“We are significantly investing in our data capabilities, to allow us to better identify those firms that cause issues, regardless of size,” the FCA added.
Scanlon, a 44-year-old Utah native who claimed to have sold three businesses before he finished his degree in business at Utah Valley University, bought Nvayo in August 2017.
Between November 2022 and May 2023 he was also chief executive of the company, which in 2021 swung to a £1.9mn profit from a £9.2mn loss the previous year.
He controlled the business, which once had a physical office in the City of London but is now fully remote, through subsidiaries in the UK and US — all ultimately owned by PMA Media Group, his Delaware-registered online marketing company.
The entities lay behind a concierge service called Aurae Lifestyle, which the DoJ said charged tens of thousands of dollars in “membership fees”. Aurae offers the chance to “rub elbows with the elite” by attending “the most exclusive events” across the world, along with access to “exotic car rentals”, “luxury product procurement” and private plane rental, according to its website. Its Instagram feed is filled with yachts, supercars and villas.
As Scanlon put it on his LinkedIn page, he provided a “unique solution of liquidity” for clients’ “financial and banking needs”. Much of the financial services offering was undertaken by Nvayo, under its FCA e-money licence.
“I have spent my whole life in luxury and the experiences, treatment and reactions I receive when I use my Aurae Solid Gold Card are unrivalled,” boasts a testimonial from a watch entrepreneur on the Aurae website.
Beneath the surface, Aurae’s customers were less wholesome, according to the DoJ. They included a New Jersey resident who scammed the US Internal Revenue Service, several fraudsters and a Californian drug dealer.
In a separate 2020 New Jersey court case, a crypto entrepreneur accused of running a Ponzi scheme used his Aurae card to transfer $100mn between 2018 and 2019.
The DoJ also cited a case where Nvayo, in July 2019, restricted the account of a US citizen later charged with fraud in relation to a large-scale cryptocurrency mining scheme. Scanlon continued to “assist” the customer, despite Nvayo’s concerns, according to DoJ court filings.
Scanlon was arrested in Miami Airport on May 25 last year after travelling to the US. He remains under house arrest in New Jersey and did not respond to requests for comment.
In court filings, his lawyers said: “Mr Scanlon has consistently disputed any wrongdoing, as he does today. Having now been charged, his one and only goal is to clear his name through the judicial process.”
“The evidence in this case, which includes third-party audits, will show that Mr Scanlon was committed to compliance with all laws and regulations and invested millions to ensure that his business was compliant,” they added.
The charges against him were made public in the summer of 2023. Months later, in October 2023, the FCA launched a review of Nvayo’s systems.
The exercise involved evaluating the files of Nvayo’s top 10 clients by volume and/or value. The regulator found them all to be “inadequate” under FCA standards. The money-laundering failings led to a separate supervisory notice from the FCA in November.
Nvayo petitioned the Upper Tribunal, an independent body that adjudicates on regulatory decisions, to overturn restrictions including a ban on Nvayo carrying out any e-money services and disposing of any of its own or its customers assets without prior FCA approval.
It argued the August sanctions were unfair because the company suspended Scanlon when the allegations came to light.
Nvayo insisted that the DOJ case, which names Nvayo more than 20 times and describes Nvayo’s involvement in moving tens of millions of dollars between Scanlon’s clients and companies, “did not concern [Scanlon’s] conduct as regards Nvayo”. The company had begun its own “remediation plan” for its anti-money laundering controls in January 2023.
The company added that Scanlon had undertaken to sell his shares in Nvayo, and stressed that he was “presumed innocent”.
Nvayo also argued that the money laundering concerns highlighted by the FCA were “administrative in nature” and “not as serious as stated” by the regulator. The company added that it was unfair to judge a 30,000-client business based on the files of just 10.
In its initial ruling, the Upper Tribunal came down on the side of the FCA and upheld Nvayo’s restrictions until the case receives a full hearing. The date for that has not yet been set. “Where we have concerns about individual firms, we will not hesitate to take assertive action, as we have done in this case,” the regulator said in a statement after the ruling.
“Nvayo is proactively working to satisfy any requests from the FCA as a priority,” the company said. “The firm is very conscious that it has a customer base that regrettably can’t transact or access money within their Nvayo accounts.
“Nvayo empathises with these customers and will continue to do everything within its power to get restrictions relaxed so that those customers who wish to transact may proceed.”
Nvayo has already lost three of the four banks that it used to safeguard client money. According to tribunal filings, the final bank has served notice that will take effect at the end of March, the same day that its next set of accounts is due to be filed with Companies House.