Public statement concerning Dapptricity PLC (“Dapptricity”)

PUBLIC STATEMENT CONCERNING A DIRECTION ISSUED BY THE ISLE OF MAN FINANCIAL SERVICES AUTHORITY UNDER SECTION 26 OF THE DESIGNATED BUSINESSES (REGISTRATION AND OVERSIGHT) ACT 2015 IN RESPECT OF DAPPTRICITY PLC (”DAPPTRICITY”) AND THE DE-REGISTRATION OF DAPPTRICITY UNDER SECTION 12 OF THE DESIGNATED BUSINESSES (REGISTRATION AND OVERSIGHT) ACT 2015.

Introduction

Designated Businesses are also commonly referred to as Designated Non-Financial Businesses and Professions or “DNFBPs”. The Designated Businesses (Registration and Oversight) Act 2015 (as amended June 2019) (“the Act”) came into force on 26 October 2015.

It should be noted, the Act does not make persons captured by its provisions financial services licenceholders of the Authority. The Authority’s role in licensing and supervising financial institutions is distinct and entirely separate from its role under the Act.

1. Action    

1.1. The Isle of Man Financial Services Authority (“the Authority”) makes this public statement in accordance with powers conferred upon it under section 27 of the Act.

1.2. The making of such public statement supports the Authority’s statutory objectives of, among other things, securing an appropriate degree of protection for customers of persons carrying on a regulated activity, reducing financial crime and maintaining confidence in the Isle of Man’s financial services industry.           

1.3. The Authority commenced an inspection under section 14 of the Act in March 2021 to assess Dapptricity’s compliance with the Anti-Money Laundering and Countering the Financing of Terrorism Code 2019 (“the Code”).

1.4. The Authority makes this public statement to inform the public that:

1.4.1. During the inspection, Dapptricity was unable to accurately confirm it’s number of customers, what customer due diligence was held or the full extent of the activities that were provided under the Act.

1.4.2. The Authority was subsequently advised that Dapptricity’s assets were due to be transferred to a company in the British Virgin Islands. On completion of the transfer, Dapptricity would no longer be undertaking designated business activities and therefore would request to be de-registered as a designated business.

1.4.3. The Authority attempted several times to obtain the information referred to in 1.4.1 from Dapptricity via the appointed primary contact for the Authority which was an Isle of Man Corporate Service Provider (“CSP”). This CSP had been appointed as registered agent of Dapptricity and provided Money Laundering Reporting Officer services.

1.4.4. Due to the inability of the Authority to obtain pursuant information in relation to the inspection, on 26 May 2021 the Authority issued a direction in line with section 26 of the Act requiring Dapptricity to suspend all designated business activity with immediate effect.

1.4.5. The CSP was able to obtain some of the requested information, however the Authority was unable to complete its inspection due to the outstanding information and documentation.

1.4.6. On 23 June 2021, the CSP confirmed that a signed resolution had been received confirming the transfer to the British Virgin Islands had completed. Following this, Dapptricity requested to de-register under the Act.

1.5. On 11 October 2021, Dapptricity de-registered as a designated business.

1.6. Further details of the company and its officers are available online through the Isle of Man Companies Registry website: https://services.gov.im/companies-registry

2. Additional Background           

2.1. Dapptricity registered with the Authority as a registered person under the Act as a business engaged in convertible virtual currency activity.

2.2. To date, the Authority has been unable to complete the inspection commenced in March 2021 due to outstanding information, therefore it cannot determine whether it is satisfied with Dapptricity’s compliance with the Code at this time.

3. Key Learning Points for Industry  

3.1. Compliance with the Code is a legal requirement; the Authority is committed to taking appropriate and proportionate action to address contraventions of the Code.

3.2 There are a number of actions available under both the Act and the Code to address identified instances of non-compliance with the Code. Potential actions include the issuance of a direction and / or public statement as well as the issuance of civil or criminal sanctions under the relevant AML/CFT legislation. The particular circumstances of the relevant entity will determine the type of action taken by the Authority.

3.3. Active engagement and cooperation with the Authority provides the best possible opportunity to resolve matters in a timely and constructive manner and, where appropriate, to avoid further action by the Authority.

3.4. The Authority will communicate ongoing matters when it is in the public interest to do so, for instance, where the Authority is not satisfied that a registered person is able to take the necessary steps to comply with the Code.

3.5. Any person who is not registered to carry on designated business in or from the Isle of Man is prohibited to do so under section 7 of the Act.

3.6. The Authority’s Designated Business Registration Policy now requires a real management and control presence in the Isle of Man for all applications to register for convertible virtual currency activity.