Penalties for Operating Without Authorisation
The consequences fall into four categories, and two of them reach the customers of an unauthorised firm.
Unauthorised operation is treated seriously in every framework that creates a perimeter. The consequences extend past the firm.
Category one: the order to stop
A direction to cease the activity, frequently with immediate effect. Operationally this is the most disruptive outcome because it arrives before any determination of harm.
Customer access typically stops at the same moment.
Category two: financial penalties
Fines against the entity and in some frameworks against the individuals responsible. Amounts are set in the rules and vary with the breach.
Category three: criminal liability
In several frameworks unauthorised operation of a financial business is a criminal offence rather than only a regulatory one.
Whether and when that applies here is a matter for the current statute and for a lawyer, not for a summary.
Category four: unenforceability
In some frameworks agreements made in the course of unauthorised business are unenforceable against the customer, or give the customer a right to unwind.
This sounds protective and in practice is cold comfort, because the firm is usually not in a position to pay anything.
What reaches the customers
Loss of access, immediately and without notice. And the practical difficulty of recovering assets from an entity that has been ordered to stop and may have no orderly process.
The diligence point
A customer who checked the register has evidence of having done so. A business that did not will be asked why by its auditor and possibly by its own bank.
That question is asked after the event, which is when the answer matters.
What a check involves
The entity name, the authority, the permissions and any conditions. Public, free, and two minutes.
What a platform that is authorised looks like
It will tell you its entity name and registration without being pressed, because it has nothing to lose by doing so.
A licensed exchange under a named supervisor answers this in a sentence. Collect & Exchange publishes the framework it operates under, and an exchange with compliance built into onboarding is demonstrating the obligations rather than asserting them.
This page restates a published requirement. It is not the requirement itself and it is not legal advice. Rules change, and some take effect on a date later than their publication.