The annual list recognises outstanding lawyers who are making a significant impact in the Hong Kong legal market and who have demonstrated strong technical ability, client service and leadership potential. Peter’s inclusion reflects his growing reputation as a leading offshore lawyer advising on British Virgin Islands and Cayman Islands law matters across Asia and internationally.

Peter advises clients on complex, high-value and cross-border banking and finance, blockchain and corporate transactions. He acts for a broad range of clients, including onshore and midshore law firms, accounting practices, corporate service providers, banks and other financiers, leasing houses, private equity houses, family offices, investment funds, listed companies, cryptocurrency exchanges and market-makers, other corporate entities and high-net-worth individuals.

With more than a decade of experience advising on offshore transactional matters, Peter has practised in London, the Channel Islands and Hong Kong. Before joining Stephen Ailwood Legal, he worked at leading international and offshore law firms and more recently led the Banking & Finance and Corporate groups of a Cayman Islands-headquartered offshore law firm in Hong Kong.

His recognition in Asian Legal Business’ Hong Kong Rising Stars List follows a series of accolades for his offshore practice. Peter is recommended in The Legal 500, has been consistently ranked in Asian Legal Business’ Offshore Client Choice List, and has been included in Asia Business Law Journal’s A-List of top offshore lawyers. He also sits on the BVI Finance Working Group on Digital Assets.

Peter spoke of his delight in being recognised in the Asian Legal Business’ Hong Kong Rising Stars List.

“I am honoured to be recognised amongst my esteemed peers. Hong Kong has played an important role in the development of my offshore practice, and I am grateful to the clients and colleagues who continue to place their trust in me,” Vas said.

“This recognition is particularly meaningful given the strength and depth of talent across the Hong Kong legal market, and I look forward to continuing to support clients on complex cross-border matters across Asia and beyond.”

This latest recognition underlines Peter’s strong track record in offshore legal services and Stephen Ailwood Legal’s continued growth as a law firm supporting clients across key offshore international financial centres. Stephen Ailwood Legal congratulates Peter on this well-deserved achievement.

ENDS

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A bank can collapse over a weekend—the demise of Silicon Valley Bank proved that. But the US securities registration process takes months.

For years, that gap has been one of the quietly unresolved tensions in cross-border bank resolution. On April 10, the Securities and Exchange Commission took a meaningful step toward fixing it.

The Division of Corporation Finance issued a no-action letter to the Bank of England confirming that a UK bank can implement a bail-in resolution without registering the resulting securities exchange. At the same time, SEC Chairman Paul Atkins announced that his staff is drafting a broader exemption covering foreign bail-in transactions generally.

Taken together, these developments give cross-border resolution practitioners the regulatory clarity they’ve been waiting for — and flag a live issue for anyone advising on international bank financing.

Speed Meets Registration

Bail-in is an emergency tool. When a UK bank or regulated investment firm is failing, the Bank of England can direct an immediate resolution. The entire process—write-downs, conversions, restructuring—can be completed over a single weekend. US securities law doesn’t pause for any of that.

The SEC confirmed in the letter what practitioners had long assumed: Exchanging bail-in instruments for ordinary shares is an “offer” and “sale” of securities under Section 2(a)(3) of the Securities Act. That means registration would be required absent an available exemption.

But registering a securities offering takes months of SEC review. When a resolution is underway at midnight on a Friday, that process isn’t available.

The stakes are real. Global banks have global investors. US holders of the bonds being written down or converted have US securities law rights. Without regulatory certainty, executing a cross-border resolution cleanly, at the speed that resolution demands, is a genuine legal problem.

Two-Step Structure

The Bank of England’s updated bail-in approach introduces an interim step designed specifically to fit within an existing Securities Act exemption. It works in two stages.

First, when resolution is triggered, bail-in securities are written down and exchanged for non-transferable contingent beneficial interests, called PROPPs (Potential Rights to Onward Property or Proceeds) pursuant to a published bail-in resolution instrument. You can’t trade PROPPs; they carry no certificate. They only go to existing holders of the bailed-in securities and represent a potential right to shares—or the proceeds from the sale of shares—once resolution concludes.

Second, PROPP holders exchange those interests for ordinary shares in the resolved firm, at a ratio set out in a supplemental bail-in resolution Instrument. The issuer of the bail-in securities, the PROPPs, and the resulting shares must be the same entity or a wholly owned, fully guaranteed subsidiary.

That structure isn’t accidental. Every feature of it—restriction to existing holders, no certificate, non-transferability, same issuer—is designed to fit within the Section 3(a)(9) exemption under the Securities Act, which covers exchanges by an issuer exclusively with its own existing security holders.

SEC Staff Position

The SEC staff indicated it wouldn’t recommend enforcement action where the structure is used without registration, based on the staff’s opinion that Section 3(a)(9) applies.

The division staff confirmed it also wouldn’t recommend enforcement action when a firm implements this two-step exchange without registration, in reliance on an opinion of counsel that Section 3(a)(9) applies.

Two caveats apply. The position is limited to the facts presented—different circumstances could yield a different answer. And it’s an enforcement position only, not a legal conclusion. The letter provides practical cross-border comfort but doesn’t create a new exemption.

Why It Matters

The UK’s framework under the Banking Act 2009 sits within a broader global architecture. The EU’s Bank Recovery and Resolution Directive and similar systems around the world share the same core design.

Contractual recognition of bail-in—the requirement that instruments governed by non-UK law expressly acknowledge they may be subject to resolution powers—is a live drafting issue in every cross-border bank financing. Getting that language right and understanding how US securities law interacts with it when resolution happens, isn’t a theoretical exercise.

The broader exemption that Atkins has directed staff to undertake will be worth watching. If it moves quickly, it could provide a more durable and general solution than fact-specific no-action relief.

Whether that exemption can accommodate the full range of global resolution structures beyond the Bank of England model will be the next test.

Reproduced with permission. Published 6 May 2026. Copyright 2026 Bloomberg Industry Group 800-372-1033. For further use, please visit:https://www.bloombergindustry.com/copyright-and-usage-guidelines-copyright/

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It was revealed that underlying the decision to close his account, Mr Farage’s bank took the view that his political views did not align with those of the bank’s chief executives, and so his bank did not wish him to continue as its customer. This prompted some further investigations into the justification for closing Mr Farage’s account.

A dossier subsequently released by Mr Farage’s bank’s “wealth reputational risk committee” showed that Farage was classed as a “lower risk” politically exposed person [PEP] at the time. This led to a public spat between Mr Farage and his bank which was ultimately settled out of court.

New De-Banking regulations

The Payment Services and Payment Accounts (Contract Termination) (amendment) Regulations 2025 [“the Regulations”] introduced from 28 April 2026, require banks to give a reason for “de-banking” their customers. This appears to have prompted a spate of closures of bank accounts, ahead of the Regulations coming into effect, which prompts the question of whether such closures have been justified or in accordance with the terms of contract between the customers and their banks.

The Al-Yasin v Starling Bank case

The issue was highlighted in the case of Yasin Al-Yasin v Starling Bank Limited [2025] EWHC 3582 (KB) [“the Case”]. This was heard in the Kings Bench division at the Royal Courts of Justice, and the Honourable Mr Justice Morris gave the judgment [“the Judgment”]. This decision highlighted the tension between the need to treat customers fairly and the requirement to comply with anti-money laundering (AML) regulations.

According to the judgment, Mr Yasin Al-Yasin sought an injunction against Starling Bank [“the Bank”] for closing his two accounts with the Bank. The issue was particularly important for Mr Yasin Al-Yasin, as a disabled person, as his concern was that, without a bank account, he would not be able to access payments made to him by the Department of work and pensions, which he relied upon to pay his daily living expenses.

The court in the Case applied the American Cyanamid test, namely those in the case of American Cyanamid co (No 1) v Ethicon Ltd [1975] UKHL 1, the first issue under which test was whether there was a serious issue to be tried, which equated to whether there was a reasonable prospect of success on the claim. The court found that the Case failed that test.

Under the contract between Mr Yasin Al-Yasin and the Bank, his account could be closed with two months’ notice under defined circumstances, one of which was the suspicion of using the account for criminal or fraudulent purposes, which, according to the Judgment, is what the Bank was relying upon, as it had received a Suspicious Activity report about Mr Yasin Al-Yasin from the National Crime Agency. The Court accepted that evidence and dismissed Mr Al-Yasin’s application for an injunction, although the Bank had only given 28 days’ notice to terminate Mr Yasin’s accounts: the Bank’s terms and conditions allowed immediate termination without notice where it suspected that the account was being used for criminal or fraudulent purposes.

Implications of the Al-Yasin v Starling Bank case

The Case showed the reluctance of courts to use interim powers  which would allow it to issue mandatory injunctions which would interfere with a bank’s discretion to terminate a bank account, where such closure was based upon evidentially-based financial crime concerns and was in accordance with the terms of contract between a bank and its customer.

Appealing decisions under the new regulations

Under the new Regulations, individual savers and small business owners will have to be given at least 90 days’ notice before their bank accounts are closed, increasing this from the current requirement of 2-months’ notice. There will be the need for more transparency, as banks will need to give a clear written explanation of why they have closed a customer’s account. The Treasury has stated that this will allow customers who have had their bank accounts closed by their bank to appeal such decisions to the Financial Ombudsman Service.

Of course, the new regulations may not make much difference to the Al-Yasin type of circumstances in which the closure may have been based upon a justified basis, namely the use of an account for criminal or fraudulent purposes. However, customers who have had their accounts closed by their Bank and do not understand the reason for this or are not satisfied with the explanation given to them by their bank, ought to seek advice as to whether the closure can be challenged under the new regulatory regime.

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Yes, those convenient, flexible micro-loans that financed everything from home upgrades to holiday travel (and perhaps one too many goat-eating sessions) are now coming due. For non-deposit taking credit providers (NDTCPs) and non-deposit taking microfinance businesses (NDTMBs), this repayment wave necessitates a reminder of a significant regulatory shift introduced by the Business Laws (Amendment) Act 2024 (the Act).

What changed?

The Act amended the Central Bank of Kenya Act (Cap 491) (the CBK Act) (with respect to NDTCPs) and the Microfinance Act (Cap 493C) (the Microfinance Act) (with respect to NDTMBs). The amendments introduced stricter compliance requirements for NDTCPs and NDTMBs, including enhanced disclosure obligations, more robust consumer protection measures, and clearer guidelines on interest rate calculations and fee structures. For these businesses, the regulatory perimeter has tightened particularly around lending practices, borrower assessments, and recovery procedures.

Non-Deposit Taking Credit Providers

For NDTCPs, the amendments introduce key provisions including mandatory transparency requirements with respect to the terms and conditions of credit that must be accepted by the borrower. Additionally, a NDTCP’s license may be suspended or revoked if the NDTCP fails to conclusively address a customer’s complaint within the time and in the manner prescribed by the Central Bank of Kenya (CBK) or if the NDTCP imposes unreasonable or unjustifiable charges on the loan.

In addition to the amendments introduced by the Act, on 7 August 2025, the CBK circulated to the public the draft Central Bank of Kenya (Non-Deposit Taking Credit Providers) Regulations, 2025 (the NDTCP Regulations) for public comments. If approved in their current form, the NDTCP Regulations shall, on commencement, apply to any NDTCP who is not regulated under any other written law. As we have highlighted in previous commentaries, the scope of the NDTCP Regulations is drafted in very broad terms and, on a literal reading, could technically bring a wide range of non-deposit taking lenders within the CBK’s regulatory purview. It remains to be seen whether, and to what extent, this broad licensing requirement will be applied to non‑deposit‑taking wholesale credit providers, project financiers and alternative financing models such as chamas.

Crucially, under the NDTCP Regulations, NDTCPs are required to either apply for registration (where their initial capital is less than KES 20 million) or licensing (where their initial capital is more than KES 20 million) by the CBK within six (6) months of the commencement of the NDTCP Regulations. The comprehensive licensing and registration framework implements different capital and compliance thresholds applying to each category.

The NDTCP Regulations will introduce comprehensive compliance requirements including detailed fit-and-proper criteria for directors and significant shareholders, stringent consumer protection measures prohibiting aggressive collection practices or unauthorised contact with customer references, and robust anti-money laundering obligations. Additionally, specific limitations on interest recoverable from non-performing loans, and restrictions on variation of pricing parameters and credit terms shall also apply. Failure to comply attracts significant consequences as CBK is empowered to impose a broad range of enforcement and administrative sanctions. These include monetary penalties starting at a minimum of KES 2,000,000, prohibitions on carrying out certain permissible activities and in severe cases, the suspension or revocation of licenses or registration.

Non-Deposit Taking Microfinance Businesses

The Act introduces significant amendments to the Microfinance Act with respect to NDTMBs. NDTMBs’ are now required to apply to the CBK for a licence to conduct their business. Any NDTMB who fails to comply with this requirement commits an offence under the Microfinance Act. The Microfinance Act as amended by the Act gave existing NDTMB’s, a six (6) month grace period to apply for licensing. This transition period expired on 27 June 2025. The transition provision in the Act allows existing NDTMBs who applied for licencing within the six months grace period permission to continue conducting their business pending determination of their applications by the CBK.

The licensing framework is complemented by comprehensive transparency and consumer protection requirements. These obligations mandate NDTMBs to clearly inform their borrower customers of all financial costs associated with a micro-loan, including interest, fees, and other charges which may only be collected if expressly provided for in the loan agreement. NDTMBs must also safeguard the confidentiality of borrower information. The Microfinance Act expressly prohibits NDTMBs from employing aggressive recovery methods, such as harassment or threats directed at a borrower or any other person. Further, the Microfinance Act requires NDTMBs to always comply with the Data Protection Act and constitutional privacy rights.

Why it matters now

As Krisi Loans mature, lenders and borrowers must take into account the changes introduced by the Act to the CBK Act and the Microfinance Act. NDTCPs and NDTMBs who offer consumer loans such as logbook-backed facilities, salary advances, or consumption loans must comply with these enhanced compliance requirements when collecting and recovering these outstanding Krisi Loan portfolios. Non deposit taking credit providers must also anticipate and plan for compliance with the more rigorous standards for credit collection practices on the horizon such as those proposed in the NDTCP Regulations. Every non-deposit taking credit provider who already has or expects to have lending arrangements with borrowers resident in Kenya must understand the registration and licencing requirements proposed in the NDTCP Regulations and prepare for registration or licencing.

This is particularly relevant in light of the CBK’s active efforts to rein in rogue lenders and strengthen borrower protections. On 25 February 2026, the Cabinet Secretary for National Treasury and Economic Planning, John Mbadi, briefed the Senate on measures the Government is implementing to safeguard consumers in the rapidly expanding credit market. He identified the NDTCP Regulations as a central tool, underscoring the pressing need for credit providers to align their policies with these requirements. He also noted that the CBK is working with the Office of the Data Protection Commissioner (ODPC) to ensure consistent data privacy standards across digital lenders.

The ODPC has similarly demonstrated a commitment to active enforcement of privacy protections in this sector. This year, the ODPC delivered a landmark decision regarding the unlawful processing of personal data by Ceres Tech t/a Rocketpesa, a popular a digital lender. The ODPC imposed a KES 700,000 penalty on the digital lender over unlawful debt collection practices including excessive texts, calls and threats. The ODPC has previously sanctioned this digital lender and others including Rosky Credit, a NDTMB over promotional messages sent to customers without their consent.

The potential risk and liability exposure for non-compliance is therefore significant. If not already done, every credit provider must undertake a review of its current consumer protection policies, recovery procedures and pricing models now to ensure that it remains compliant as the regulatory framework tightens. Debtors, meanwhile, benefit from greater transparency, but also face the reality of their obligations in a more regulated environment.

The path forward

The message is clear: the holiday may be over, but regulatory compliance is evergreen. NDTCPs and NDTMBs must balance effective portfolio recovery with adherence to both current and forthcoming regulations. This includes ensuring all recovery practices respect the new consumer protection standards, maintaining proper documentation for regulatory reporting, and preparing for the transition to the anticipated comprehensive regulatory framework. For debtors, understanding these protections, and their continued obligations, is equally important. The regulatory changes don’t eliminate debt; they ensure recovery happens within a fair, transparent framework.

At Stephen Ailwood Legal Kenya, we are guiding clients through these changes because understanding the fine print is always in season and preparing for tomorrow’s regulations today is simply good business.

For enquiries on financial services regulation and compliance strategy, please contact Joseph Githaiga, Peter Mwaura, Michael Okeyo and Kellen Maganjo. Please note that this e-alert is meant for general information only and should not be relied upon without seeking specific subject matter legal advice.

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Historically, English law recognised two categories of personal property, as things in possession and things in action. The Act confirms that certain digital assets can fall into a distinct third category, adopting a principles-based test rather than a standard statutory definition.

Digital assets may qualify where they are:

• definable and identifiable;
• transferable;
• subject to exclusive control;
• sufficiently permanent and rivalrous.

Judicial Foundations

The courts have demonstrated a willingness to recognise digital assets through case law.

In AA v Persons Unknown [2019] EWHC 3556 (Comm), the court allowed Bitcoin to be constituted as property, following a ransomware attack. Subsequently, confirming that the digital assets were capable of being the subject of proprietary protection. Later, Ion Science Ltd v Persons Unknown [2020] followed a similar positioning. In this case, the High Court granted asset injunctions and disclosure obligations in respect to misappropriated digital assets.

Further, the court’s decision in Dasisz v Persons Unknown & Huobi Global Ltd [2022] permitted the issuance of interim injunctions and a disclosure order against a cryptocurrency exchange to facilitate the recovery of stolen assets. The legal framework was trending toward the acceptance of digital assets, but the Act sought to resolve lingering ambiguity about their classification and reduce transaction friction.

What Does this Mean for Lenders?

For lenders, the Act removes any doubt that digital assets that qualify under the above criterion can be used as collateral in structured lending arrangements and confirms the availability of established proprietary remedies, such as injunctive relief, tracing, and freezing orders. As a result, lenders have access to more robust collateral structuring and can rely on greater confidence in the enforceability of security packages.

However, despite the act’s promise, it is important to manage lender expectations. The act does not include a bespoke security regime for digital assets, nor does it resolve practical issues surrounding custody, control and insolvency priority.

Control and Custody

Importantly, recognising digital assets as property does not eliminate all prior risks. Therefore, effective enforcement will depend on control of the private keys and reliable custody arrangements. When digital assets are not properly segregated or subject to contractual claims, lenders may face tracing complexities or fall behind proprietary claims of other stakeholders.

Although ownership does not necessarily terminate if private keys are lost, it can complicate enforcement. To address this concern, institutional lending structures should implement safeguards, such as reliance on third-party custodians, multi-signature arrangements, contractual control mechanisms, or segregation of controls.

For instance, when a borrower retains the practical ability to deal with tokens despite insufficient control, a charge described as “fixed” may shift to “floating”. The distinction is important in insolvency proceedings, as floating charges rank lower in priority, possibly undermining recovery status. To summarise, the court prefers to examine the degree of practical control retained by the chargor, not simply the label applied in the security document.

Subsequently, a floating charge holder ranks behind preferential creditors and becomes an unsecured creditor. Additionally, administrators may also exercise wider powers over floating charge assets. Therefore, insufficient control regarding digital asset collateral may result in reduced recoveries.

Insolvency and Asset Segregation

Recent UK exchange insolvencies, including Re Bittrex Global (UK) Ltd [2025], illustrate the significance of correctly characterising customer holdings, as evidenced by litigation over who was entitled to the company’s remaining currency stored on its blockchain.

Asset segregation can determine if an asset falls within a trust or estate. Therefore, priority outcomes in insolvency proceedings influence whether customers recover in full or rank as unsecured creditors. For secured lenders, this means the status of priority depends on the proper structure of custody and drafting of the relevant charge.

While the Act clarifies the status of digital property, it does not yet automatically provide relief mechanisms to aid in determining priority in disputes. In practice, lenders should consider structure, segregation and enforceability at the outset to ensure best practices and safeguards will hold.

Conclusion

Property recognition is only the catalyst for further legal subtleties around digital assets. In practice, digital assets used as collateral will face the question of recoverability, which depends on control architecture, custody arrangements, and priority standing. As digital asset lending becomes increasingly institutionalised, lenders should review custody and control frameworks designed to ensure that property recognition translates into practical ability to use their digital holdings and attain proper security through recoverability.

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Firm Checker responds to longstanding criticism that the FCA register is difficult for the public to use. Although the full register remains important for checks on firms that are no longer operating, the new tool aims to help users make quicker and more confident decisions. Its data draws from existing FCA records. The regulator plans further improvements to both resources as part of its wider fraud prevention work.

Partner Lisa McKinnon-Lower shared her view on the launch.

“The launch of the Firm Checker sounds to be an extremely positive and necessary step in strengthening consumer protection against fraud. In practice, once funds have been transferred, the legal and practical avenues for recovery are all too limited. I regularly advise clients who have fallen victim to professional-looking schemes only to find that tracing assets is extremely difficult and the cost of pursuing legal action is prohibitive. It is often difficult to encourage engagement by prosecution authorities for the same reason. This means that by the time advice is sought, the opportunities for meaningful intervention have often passed.

Whilst the full details of the tool’s functionality are not yet clear, my primary concern is that those most frequently victimised by these scams are not always equipped to navigate digital verification systems, particularly when they are being pressured in real time by sophisticated fraudsters. Even where consumers do check authorisation, cloned firms and misleading permissions could continue to create confusion and a false sense of security.

If designed well and used correctly, this tool could be extremely useful at tackling fraud, perhaps beyond the scope currently envisaged, I look forward to seeing how this initiative progresses.”

Fraud continues to affect large numbers of consumers. Recent FCA survey data indicates that about 800,000 people may have experienced pension, investment or crypto fraud in the twelve months to May 2024, while many cases go unreported. Firm Checker represents one part of the regulator’s attempt to strengthen protections and improve public awareness of authorised services.

Lisa appeared in Law360, Grip., Today’s Wills & Probate, FinExtra, and Finance Magnates.

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice

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The VASP Act provides regulatory clarity on virtual assets. It directly addresses the Financial Action Task Force (“FATF”) recommendations to Kenya for a clear legal framework for virtual assets. As seen in jurisdictions such as Dubai and South Africa, formalising the virtual asset ecosystem is likely to unlock more investment flows and promote access to a broader range of financial and capital markets services in Kenya. Additionally, the enactment of the VASP Act will support Kenya’s efforts to be removed from the FATF grey list.

The VASP Act requires every person offering virtual asset services in Kenya to be licensed. It designates the Capital Markets Authority (CMA) and Central Bank of Kenya (CBK) as the primary regulators of virtual asset activities in Kenya.

The VASP Act regulates entities offering the following services in Kenya:

• Virtual asset wallet providers who provide custodial wallets or services.
• Virtual asset exchanges that facilitate the (i) transfer and conversion services of one or more virtual assets or between virtual assets and fiat currency or (ii) sale, trade, or exchange of virtual assets for fiat currencies or for other virtual assets.
• Virtual asset payment gateway processors who arrange transactions involving virtual assets and fiat currency or between virtual assets.
• Virtual asset brokers who provide brokerage services to facilitate the exchange between one or more forms of virtual assets through virtual asset exchanges and virtual asset wallet providers on behalf of clients.
• Virtual assets investment advisors who provide investment advisory services on virtual assets, initial virtual asset offerings, and non-fungible tokens on behalf of clients.
• Virtual asset managers who manage virtual asset portfolios in accordance with mandates given by clients on a discretionary basis where such portfolios include one or more virtual assets.
• Virtual asset offering providers who issue and sell virtual assets to the public. This includes initial coin offerings, tokenisation of virtual assets and issuance of stablecoins.
• All licensed entities must be incorporated in Kenya and will be subject to mandatory ongoing compliance requirements.

While the VASP Act provides a clear path forward, we are cautiously optimistic about its implementation. The VASP Act requires the Cabinet Secretary for the National Treasury, in consultation with the designated regulators, to issue detailed regulations that will specify the licensing, capital, and ongoing compliance requirements for virtual asset service providers (VASPs) and issuers of virtual assets. Moreover, we expect the CMA and the CBK to issue guidance notes to traditional financial institutions that intend to offer virtual asset services, whether through existing licensed entities, subsidiaries or in partnership with VASPs.

Furthermore, the VASP Act is the foundational legal pillar of the National Policy on Virtual Assets and Virtual Asset Service Providers, 2024. The national policy includes other interventions that the government must fully implement for the ecosystem to thrive. These interventions include the promotion of financial literacy, fostering innovation, and building supervisory capacity.

Drawing from our experience with digital credit provider licence applications, obtaining regulatory approvals in Kenya within stipulated timelines is becoming increasingly challenging. This can be attributed to various factors, including a shortage of staff to review the high volume of applications.

Prospective VASPs and issuers of virtual assets should prepare for a potentially lengthy approval process. In addition to the capacity issues we have highlighted above, other factors that might cause delays include the unique nature of virtual assets and the cautious approach previously taken by the CMA and CBK regarding them.

In anticipation of this challenge, we recommend that applicants for VASP licences and for initial virtual asset offerings prepare comprehensive, high-quality applications. Applicants must assure the regulators of their commitment to supporting Kenya in combating illicit financial activities, including money laundering, terrorism financing and proliferation financing. They must demonstrate adequate internal controls, governance structures, and robust processes for cybersecurity and consumer protection.

Our team has practical experience in the virtual asset space, having advised clients locally and globally on innovative projects involving cross-border virtual assets, microlending, and payment transactions. We remain available to provide legal support and offer practical insights in this area.

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice. It is not, and does not aim to be, comprehensive. Given the general nature of its content, it should not be considered legal advice. For specific advice, please contact Peter Mwaura in our Kenya office.

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Guernsey is an independent legal jurisdiction and has its own laws for taking security in respect of Guernsey entities and their assets. The concept of a floating charge does not exist under Guernsey law and an English law debenture granted by a Guernsey company in respect of all its assets and undertaking is unlikely to be effective in respect of Guernsey assets, such as shares and bank accounts.

Lenders and their onshore counsel should consult local Guernsey counsel as early as possible in relation to a proposed financing transaction to discuss what Guernsey assets exist and how security can be taken in respect of those assets. These local law elements can then be reflected in the terms sheet and legal fee quotes.

How is security taken?

Where Guernsey security is required as part of a secured financing transaction this will typically require the preparation of a Guernsey law security interest agreement (SIA) which conforms with the requirements of the Security Interests (Guernsey) Law 1993, as amended (SIL). The SIL provides a simple and user-friendly regime for creating security interests in Guernsey assets.

There is no register of security interests in Guernsey (public or private), but specific registration regimes and procedures exist for security over Guernsey real property, ships, aircraft, and aircraft engines (for which specialist advice should be obtained).

To perfect a Guernsey security interest, the requirements of the SIL will need to be followed and completed. In certain instances, this will require notice of the security interest being validly served on the counterparty and other parties with an interest in the secured assets.

What types of security can be taken?

The SIL provides that a security interest may be created in the following types of Guernsey assets using the following methods:

• in securities (including shares in a Guernsey company), by the secured party having possession of the certificates of title to those securities;
• in a bank account where the account is held by the secured party (a charge-back), by the secured party bank having control of the account pursuant to an SIA; and
• in any other intangible moveable property such as third-party bank accounts, contract rights or receivables, by the secured party having title to the assets assigned to it pursuant to an SIA and notice of that assignment being given to the counterparty.

Key contents of an SIA

In order to comply with the requirements of the SIL, an SIA must:

• be in writing;
• be dated;
• identify and be signed by the grantor;
• identify the secured party;
• enable precise identification of the secured assets at any time;
• specify any events of default; and
• enable identification of the secured payment or performance obligations.

Priority of security interests

Under the SIL, priority among competing security interests in the same assets is determined by the order in time in which the security interests were created. Therefore it is important to recognise that creation and perfection occur simultaneously in respect of a Guernsey security interest, and requires the completion of a valid SIA and the necessary possession of certificates of title or acquisition of title by assignment (and therefore the giving of notice of assignment).

Security enforcement

The SIL and Guernsey law generally do not contain the concept of a receiver of assets. Rather, the SIL confers a power of sale or application upon a secured party following an event of default under an SIA and notice of the event of default being served on the grantor.

In exercising a power of sale or application, the secured party must take all reasonable steps to ensure that the sale or application is made:

• within a reasonable time; and
• for a price corresponding to the market value on the open market at the time of the sale of the secured assets being sold or, where there is no open market, the best price reasonably obtainable.

The proceeds of any sale or application must be applied in the following order of priority:

• in payment of the costs and expenses of the sale;
• in discharge of any prior security interest;
• to discharge the secured obligations under the SIA;
• to any secured parties with security interests created later in time; and
• any balance payable to the grantor.

How we can help

At SW Offshore our Banking and Finance specialists have several decades’ experience of providing local Guernsey law advice to both lenders and borrowers on complex and high-value cross-border secured financing transactions. We can advise across a full range of finance documents, prepare Guernsey SIAs, and assist with conditions precedents such as corporate authorisations, formalities certificates and legal opinions. We work closely with local borrowers and obligors to ensure deadlines are met. We pride ourselves on providing advice that is practical and keeps your transaction moving forward.

Please get in touch with us today if you would like to discuss our services or request a fee quote.

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice.

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What is PISCES?

The Private Intermittent Securities and Capital Exchange System (PISCES) is the Government’s new private share trading platform, due to be launched later in 2025. 

How will PISCES be delivered?

The PISCES platform will initially be delivered via a sandbox. According to the London Stock Exchange this will allow the FCA to test the design before finalising a permanent regime in 2030. Trading systems could include periodic auctions, as well as occasional and time-limited periods of continuous trading. 

Insight on the approval of PISCES

In the article James stated “Today’s move by the FCA to approve the LSE to operate a PISCES platform is a positive step to help build growth and investment in UK private companies and liquidity within a regulatory sandbox which in turn may boost the IPO pipeline,” further adding: “The platform should allow eligible investors to gain better access to private companies through the LSE’s infrastructure which should simplify the trading and settlement process as the LSE should be able to set its own rules for the platform including disclosure and other regulatory requirements – indeed the long-term potential and use of PISCES will surely depend upon the strength and understanding of the regulatory requirements which are to apply.” 

Reaction from the London Stock Exchange

Speaking about the approval in a press release, London Stock Exchange PLC CEO Julia Hoggett, said: “We are delighted to be the first venue operator to have been granted a PISCES Approval Notice by the FCA. Following several years of innovative development by the UK Government and regulators with active engagement from practitioners across the market, the London Stock Exchange has now taken a significant step towards the launch of our Private Securities Market later this year.” 

Source – LSEG Press Release 

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice.

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Introduction

Hawala banking is an informal value transfer system that has existed for centuries, originating in South Asia and the Middle East. While widely used for legitimate purposes, , it also presents legal risks due to its lack of formal regulation. While there are registered hawala agents in the UK who operate legally,, the use of Hawala can lead to potential criminal offences, exposing individuals to serious consequences.

This article provides an overview of Hawala banking, its risks, and its legal implications under the law of England and Wales. Understanding these issues is crucial for anyone using the Hawala banking system, whether for personal or business transactions, to ensure compliance with the law and avoid criminal liability.

What Is Hawala Banking?

Hawala is a trust-based system of money transfer that operates outside conventional banking channels. It relies on a network of intermediaries, known as Hawaladars, who facilitate the transfer of funds between different locations without physically moving money.

How Does Hawala Banking Work?

The first step in a Hawala Banking transfer is the initiation of the transfer – a sender gives monies to a Hawaladar in one country. This will amount to the funds to be transferred plus a fee for the use of the service.

There is then communication Between Hawaladars – the sending Hawaladar contacts a counterpart in the recipient’s country, instructing them to deliver the equivalent amount to the recipient.

The transaction is then undertaken by way of the payment to the recipient- the counterpart Hawaladar will give the funds to be transferred to the recipient in the other country, often the transfer or will be provided with a passcode to give to the recipient so that they can correctly identify themselves and the transaction to the counterpart Hawaladar.

Finally, there will be settlement of accounts between the Hawaladars, often the debts will be settled later, often through trade, cash, or other transactions.

Hawala transfers are often favoured for speed, low cost, and ability to reach regions with limited banking infrastructure. However, its informal nature makes it difficult to trace and its use has historically favoured by criminals for this very reason. As such, the use of the system can create a significant risk of investigation and prosecution by British authorities.

Legal and Regulatory Risks of Hawala Banking

In the UK, money service businesses must be registered with the Financial Conduct Authority and comply with anti-money laundering regulations. A Hawala transaction will be classed as a money remittance service under paragraph 1(f) of schedule 1 to the Payment Service Regulations 2017, as such transactions conducted without registration will be unregulated. Such unregulated transactions constitute a criminal offence under s139(1) of the Payment Service Regulations 2017.

Because Hawala transactions are undocumented and operate on trust, they are vulnerable to misuse by criminals. UK authorities, including the National Crime Agency, actively investigate and prosecute individuals suspected of using Hawala for illicit purposes. Even if an individual is unaware of wrongdoing, they may still face legal scrutiny.

Funds moved through Hawala may by subject to taxation in certain circumstances, if it is not declared to HM Revenue & Customs it may lead tax evasion issues. There are stringent laws and regulations on undeclared income or failure to declare taxable gains, and individuals in breach can face severe penalties, including potential prosecution, fines and imprisonment.

Users of Hawala banking may unknowingly facilitate criminal activity. Under Section 327 of POCA, a person commits an offence if they become involved in transferring criminal property. The offence does not require full knowledge that the money is criminal property, suspicion will be enough (see R v Pace [2014] EWCA 186), even if they did not know the money was illicit. The legal threshold for prosecution is low, placing individuals at significant risk. It is therefore important that if an informal banking system is used then meticulous records are kept to prevent allegations that the users are involved in money laundering.

An example of this is a case that we recently conducted. The defendants were legitimate and wealthy individuals who chose to use the hawala banking system in order to purchase high value items within the UK. Although legitimate funds were used to transfer monies from Pakistan, the funds that were used to settle the UK end of the Hawala transaction appear to have been the proceeds of fraudulent activity. The senders had no idea that the Hawaladar in the UK had utilised criminal funds to settle their end of the account. However, the UK authorities and the Police required some convincing of that fact. The use of the Hawala banking system exposed Quentin and Lisa’s clients to a protracted and unwanted investigation. However, efficient legal representation ensured that no criminal charges were brought.

How Individuals Can Protect Themselves

To avoid legal repercussions, individuals should preferably use official banking facilities or licensed money transfer services that comply with UK regulations. These services provide records of transactions, offering legal protection if authorities scrutinise a transaction.

If informal methods such as the Hawala system are used, then individuals would be wise to maintain records of all transactions, including:

• Names and contact details of the sending Hawaladar
• Amounts sent and received
• The purpose of the transfer
• Details of the recipient and the recipient Hawaladar
• Documentation showing the legitimate source of the funds remitted

Such documentation can serve as evidence of legitimate financial activity in the event of an investigation.

If accused of involvement in unlawful Hawala transactions, immediate legal representation is crucial. A solicitor or barrister specialising in financial crime can provide guidance and, if necessary, defence in legal proceedings.

Conclusion

While Hawala banking is an established financial practice with cultural significance, its use in the UK carries substantial legal risks. The lack of formal oversight means that users may inadvertently breach financial crime laws, exposing them to prosecution. By understanding these risks and taking preventative measures, individuals can protect themselves from severe legal consequences.

If you require expert legal advice regarding financial transactions or potential allegations related to Hawala banking, our team is available to assist. Contact Lisa or Quentin for a no obligation discussion over how to safeguard your legal interests.

The information provided in this article is for general informational purposes only and does not constitute financial, investment, or legal advice.

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