Customers owed $26 million feature in the first liquidators’ report for NF Global, propelled into liquidation by international customers unable to get their money out of Global’s online payment platform. Global was happy to accept their money no questions asked, but then alleged money-laundering issues as an excuse to block repayment, they complain.
Registered in New Zealand with its sole shareholder based in Switzerland and operations run out of London, NF Global Ltd promised customers an efficient online platform for transferring funds internationally coupled with an ability to handle currency conversions. It did not operate as a bank; client funds were placed temporarily with financial institutions pending further instructions for onward transfer. Customers based in Hong Kong, Italy, Israel, Romania and the United Kingdom joined forces to have NF Global put into liquidation. Liquidators PWC report it is proving difficult to identify where customers’ money is held. NF Global says most customer funds were placed with Ipagoo LLP, one of the first e-banks set up under recent UK legislation. Regulators in the UK put Ipagoo under administration in August 2019, freezing customer accounts.
In New Zealand, NF Global fiercely contested attempts to put it into liquidation. Associate judge Bell ruled there was no evidence of money-laundering by NF Global customers. Even if there were suspicions, he said, New Zealand money-laundering legislation requires the financial institution to end its relationship with the customer and to return the money. Financial institutions have no right to confiscate the money; that power lies with the police under separate legislation dealing with proceeds of crime.
Creditors demanding repayment of $16.8 million jointly asked the High Court to put NF Global into liquidation on grounds it was insolvent and could not pay its debts. NF Global produced a letter of support from shareholder Starboard Capital SA promising to stand behind its company. Starboard was given six weeks grace to find the cash. When no payments were forthcoming, NF Global was put into liquidation.
Arjang v. NF Global Ltd – High Court (9.03.21 & 23.04.21)
21.073