Crowdfunding and peer-to-peer lending platforms are disrupting finance at a phenomenal pace. At the same time they are stretching the boundaries of existing regulation and demanding fresh approaches to corporate structuring. We thrive on finding innovative legal solutions to help our clients to lead this dynamic and rapidly evolving market.
Ours is a market leading practice for market leading and challenger clients. Our extensive experience of advising crowdfunding companies and investors covers equity crowdfunding, real estate crowdfunding, peer-2-peer lending and invoice financing. We act for over 30 crowdfunding platforms.
Anti-money laundering, terrorist financing, and know your client obligations
FCA-authorised firms are required, pursuant to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on Payer) Regulations 2017 (“MLRs”), to implement anti-money laundering (“AML”) measures.
Systems and control
FCA-authorised firms must have appropriate systems and controls in place taking into account the nature, scale, and complexity of the business. This creates numerous obligations, primarily relating to:
Suitability assessment obligations
An online advice platform will need to consider whether an investment is suitable for a client when providing investment advice.
Under the Financial Services and Markets Act 2000 (“FSMA”) a person cannot carry on any “regulated activities” unless they are authorised by the FCA, or unless it falls within an exemption or exclusion. Any contravention of this prohibition is a criminal offence.
The proliferation of online platforms in financial services has created a new mechanism for distributing financial services. This article sets out the legal and regulatory challenges faced by an online financial services platform.
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