Lanistar secures FCA approval less than six months after regulatory warning

Lanistar, the UK-founded fintech whose technology partners disavowed connections with it just six months ago, is now using their licences to operate as a regulated body.

Lanistar’s CEO, Gurhan Kiziloz

After saying Lanistar had “no right” to refer to it as a partner back in November, Modulr will now underpin Lanistar’s UK operations.

FinTech Futures reached out to Modulr, which once stated Lanistar had “not completed” its due diligence process.

A spokesperson said today: “We undertake an in-depth assessment of the client at onboarding and maintain this engagement and oversight as the relationship evolves.”

“We take our regulatory responsibilities seriously and not least because it is a core component of our business model.

“With Lanistar, we look forward to working with them as they enter into the next phase of their business model. [We] will do this in a way that ensures their systems and control remain proportionate and operate effectively in practice.”

Modulr’s original furore against Lanistar sparked when the latter temporarily appeared on the Financial Conduct Authority’s (FCA) warning list last year. It then proceeded to call Modulr a partner in press releases, despite this not yet being the case.

The Hammersmith-based start-up had spent big on social media to advertise its product without specifying it lacked FCA approval.

Now, Lanistar has announced it’s acting as an Electronic Money Directive (EMD) agent of Modulr in the UK. This means the start-up can say it operates under the FCA.

Previously, the digital banking firm had to disclose it was not an FCA-approved entity on its website.

Despite telling customers it was an FCA-approved as early as 30 April on Twitter, it wasn’t until 4 May – nearly a week later – that Lanistar made the announcement and updated its website.

The FCA approval means Lanistar can distribute and redeem electronic money on behalf of its customers.

Executive new hires

Lanistar’s paid partnership with meme star ‘Hide the Pain Harold’

The fintech’s official product launch is still yet to happen despite its continued marketing pushes. It has launched multiple social media marketing campaigns, involving celebrities, influencers, and subjects of internet culture.

Currently still in “alpha testing” following its November soft launch, Lanistar will “shortly move to exclusive beta testing” before “a controlled rollout” over a six-month period.

Whilst it readies its “official” product, Lanistar has made two new senior hires. The first is chief financial officer (CFO) Bill Suglani, who spent nearly three years as Open Banking’s CFO.

The second hire is director of banking and financial services, Jeremy Baber, who previously directed operations of credit management firm Link Financial Outsourcing.

The company says it is also waiting on responses from regulators in the EU and Brazil, two regions it plans to expand to by the summer.

As per its latest release on 4 May, the company says it houses “more than 100 employees”. In July 2020, it published a press release saying it employed 45 full-time workers, a month after it said it employed 145 people – suggesting the majority of its staff work on a contract basis.

Since these announcements, as per reports by Sifted, Lanistar has repeatedly failed to pay its staff on time.

Unaudited accounts filed last month

Questions have been raised about Lanistar’s funding disclosures

FinTech Futures took another look at Lanistar’s Companies House filings. Last year, it highlighted that CEO Gurhan Kiziloz doesn’t own any shares himself in Lanistar.

On 8 April 2021, the start-up filed its unaudited accounts for the year ending December 2020. It listed total equity at £5.46 million, and one instance of called up share capital – an amount paid by investors in exchange for shares of stock.

The amount doesn’t match the £15 million the start-up claimed to raise back in June 2020, initially accredited to external backer Milaya Capital.

Lanistar’s new PR agency later told FinTech Futures in October that Milaya Capital had pulled out. Instead, it said Lanistar’s capital consisted of contributions from the CEO’s family.

A spokesperson then revealed to The Times in November that the £15 million Lanistar raised was a “director’s loan”. Rather than being an actual equity investment.

This director’s loan, supposed to support Lanistar’s self-acclaimed £150 million valuation, doesn’t appear in the firm’s latest Companies House filing.

The filing does state the company had 71 employees by December 2020. This doesn’t match any of the employee figures the company has previously announced. FinTech Futures has contacted Lanistar to clarify these figures.

At incorporation, Gursel Niyazi, 59, wholly owned the start-up as a director. There is also a third director, Soner Demiralay, who according to Endole, is also a director of one-year-old Stamford Bars Ltd and three-month-old Equinox Management Consulting.

Peeling back a shiny media campaign

Lanistar promised influencers shares in exchange for promotion. They were asked to sign non-disclosure agreements (NDAs).

That’s according to influencer TGE, who said on a podcast he had signed a contract in May. After doing a deep-dive on the company, the influencer pulled out of the contract.

One of Lanistar’s social media influencers is Birmingham-born millionaire ‘Lord Aleem’. He has posted pictures of his car with the Lanistar logo. In 2017, he was banned from driving for 12 months after receiving a conviction for speeding offences.

His father, Saleem Iqbal, was part of a £180 million money laundering scam which saw him sentenced to 16 months in jail in June 2013.

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