A week after the Financial Services Authority (FSA) fined Turkish Bank (UK) Ltd (TBUK) £294,000 for breaching the Money Laundering Regulations 2007 (MLR), the OFT has followed suit by imposing a £544,505 financial penalty on the online payday lender MCO Capital Limited (MCO) for breaching the MLR and revoked it's consumer credit licence for unfair business practices.
The OFT has a role under the MLR to supervise the anti-money laundering controls of estate agents and consumer credit financial institutions (CCFIs). CCFIs are those businesses engaged in consumer credit lending which are not either authorised by the Financial Services Authority (FSA) or supervised by HM Revenue and Customs (HMRC) as a money service business. Under the MLR, the OFT has the power to impose a financial penalty that is 'effective, proportionate and dissuasive'.
In the press release, the OFT stated it is thought that MCO's failures to conduct appropriate identity checks led to it being targeted by fraudsters who used the personal details of over 7,000 individuals to successfully apply for loans amounting to millions of pounds. In addition, the OFT found that MCO had engaged in unfair business practices by writing to people, who they were aware may not have taken out loans, asking unequivocally for repayment and continued to do so after the OFT's requests to stop the practice. Additionally, MCO was found to lack the necessary skills, knowledge and experience to run a consumer credit business. The OFT decided that all of these failures justified the revocation of MCO's consumer credit licence.
The OFT also made a third decision not to grant applications by MCO to vary its licence.
MCO has 28 days to appeal against the OFT's decisions to the First-tier Tribunal (Consumer Credit).