First Solution Money Transfer

First Solution Money Transfer was a United Kingdom-based private limited company that provided remittance services, principally for members of the British Bangladeshi community sending money to relatives in Bangladesh. The company was incorporated with a small share capital in April 2004 and began operating during that year. Its headquarters were located at the London Muslim Centre in East London, with another prominent office on Brick Lane and a network of branches and affiliated agents in British towns and cities, as well as some locations elsewhere in Europe. The business formed part of a broader transition in migrant remittances from informal, community-based value-transfer networks toward formal money-transfer companies subject to anti-money-laundering and counter-terrorist-finance controls. First Solution presented itself as a convenient channel through which expatriates could transfer funds to Bangladesh. Its Bangladesh-related operations were associated with arrangements involving banks in Bangladesh, although public statements concerning whether the company itself held the relevant Bangladesh Bank authorization were disputed. The company expanded rapidly. Reference material describes turnover rising from approximately £4 million in its early period to about £87 million for the year ending in 2007. Available Companies House accounts nevertheless provided only limited visibility into the underlying remittance flows because the company filed abbreviated accounts under the reporting standards then applicable to smaller businesses. The accounts disclosed an interest-free loan to First Solution UK Ltd, a related company whose directors included Fazal Mahmood and Ghulam Rabbani. That loan increased from £24,834 in 2005 to £190,697 in 2006. The accounts also recorded director remuneration and a small foreign-exchange loss, but did not set out the funds transferred on behalf of customers. In June 2007, First Solution collapsed and entered liquidation. The directors stated that approximately £1.7 million was owed to members of the public who had used the service in the preceding two or three months, while contemporary accounts described the total public exposure as nearly £2 million. Most affected customers were reported to have been from the Sylhet region of Bangladesh. The collapse caused substantial distress in the UK Bangladeshi community and prompted questions about the adequacy of supervision, the company's financial controls, possible speculative currency-market activity, and whether media coverage and mass refund demands had intensified a liquidity crisis. Allegations of fraud were investigated, but the available reference material does not establish a final finding of criminal wrongdoing. The failure generated political and community campaigns. Local community leaders, the Member of Parliament Stephen Timms, George Galloway, and others called for investigations and a compensation mechanism modeled on the response to the Farepak collapse. Demonstrations and parliamentary lobbying took place in July 2007. The Metropolitan Police seized documents and computers from the company's London offices on 6 July, and the Companies Investigation Branch of the Department for Business, Enterprise and Regulatory Reform requisitioned the material. Provisional official receivers were appointed in August at the request of the Secretary of State. A successor operation reportedly acquired the First Solution brand and began trading in May 2008 under new management made up of former agents and branch operators. It stated that it intended to repay as much as possible to affected remittance creditors, but the amount ultimately repaid is not clear from the available sources. The original company's later legal and operational status, and whether the successor brand continued as a significant active service, are also unclear.

First Solution Money Transfer was incorporated in the United Kingdom on 14 April 2004 as a limited company with issued share capital of £100. The initial shareholdings recorded in Companies House documents were divided among four directors: Fazal Mahmood, Ghulam Rabbani, Shah Mohammed Abdul Hadi, and Mohammed Nazrul. Rabbani also served as company secretary. The company began operating during 2004 and focused on transfers from Britain to Bangladesh, serving a customer base strongly connected to the Sylheti and wider British Bangladeshi community. Its offices reflected that community orientation. The principal headquarters were at the London Muslim Centre in East London, while Brick Lane hosted another prominent office. A network of branches and affiliated agents extended into major UK towns and cities, with a smaller presence elsewhere in Europe. The company participated in the formalization of migrant remittance channels, a policy environment in which governments and international institutions sought to move customers from informal value-transfer arrangements into regulated businesses subject to anti-money-laundering and counter-terrorist-finance rules. During the 2005–06 accounting year, the company issued an additional 40,000 £1 shares, although the available filings do not identify their recipients. Its abbreviated accounts offered little information about the central remittance business. Because the company reported under small-business accounting provisions, it did not provide a cash-flow statement, and the accounts did not disclose the customer funds transferred to Bangladesh. They did, however, record an interest-free loan to First Solution UK Ltd, a related company also associated with Mahmood and Rabbani. The loan rose from £24,834 in 2005 to £190,697 in 2006. Directors received approximately £9,600 in each of the two reported years, auditors received £5,000 in one year, and the company recorded a foreign-exchange loss of £435 for 2005–06. Despite the limited accounting detail, the business grew substantially. Reference material reports turnover increasing from roughly £4 million to approximately £87 million by the year ending in 2007. This expansion created a large operational and liquidity exposure because the company held or transmitted money on behalf of many customers. The absence of public detail about the remittance flows made it difficult for outside observers to assess the company's financial condition. The business failed abruptly in June 2007. The company closed on 28 June, and liquidation followed. Its directors said that it owed around £1.7 million to customers who had used the service in the previous two or three months; other descriptions placed the public loss at nearly £2 million. The majority of affected customers were reported to be from Sylhet in Bangladesh. The failure became a major community crisis and raised concerns about whether the company's collapse involved fraud, risky foreign-exchange speculation, weak controls, or a severe cash-flow shock caused by customers demanding refunds after alarming media reports. The available material records competing explanations but does not resolve the cause. The collapse also produced uncertainty over regulatory responsibility. Bangladesh Bank's governor said that First Solution had not been granted a license, while the bank's published information reportedly listed agreements between the company and several Bangladeshi banks that allowed inward remittances. The episode exposed differences between formal compliance requirements and safeguards designed to protect customer money. Critics argued that regulation concentrated on anti-money-laundering and counter-terrorist-finance obligations without providing equivalent protection against operational failure or insolvency. Community leaders and politicians organized a response. On 8 July 2007, a rally at Altab Ali Park called for public compensation. George Galloway met Economic Secretary to the Treasury Kitty Ussher on 10 July to advocate a Farepak-style crisis fund, and customers demonstrated and lobbied Members of Parliament outside Parliament on 11 July. The issue was debated in Parliament on 18 July. The government indicated support for a rescue or crisis-fund approach, although it was not expected to contribute public money directly. Stephen Timms requested an investigation, and on 6 July the Metropolitan Police seized company documents and computers. The Companies Investigation Branch later requisitioned the materials. On 3 August, official receivers were appointed as provisional receivers at the Secretary of State's request. The original operation was subsequently described as First Solution Money Transfer Ltd, later known as XTL Ltd. In May 2008, a new management group consisting of 13 former agents and branch operators reportedly acquired the First Solution brand and resumed trading. The successor's stated purpose included recovering the business and paying affected creditors as far as possible. The available references do not establish the eventual level of repayment, the final outcome of the investigations, or the later status of the revived brand.

• 2008

  Brand reportedly relaunched

  [1]First Solution Money Transferen.wikipedia.org

  Former agents and branch operators reportedly acquired the brand and resumed trading under new management.

• 2007

  Company collapses and enters liquidation

  [1]First Solution Money Transferen.wikipedia.org

  First Solution closed in late June and entered liquidation, leaving a large number of remittance customers unpaid.

• 2007

  Police and government investigations begin

  [1]First Solution Money Transferen.wikipedia.org

  The Metropolitan Police, Companies Investigation Branch, and official receivers became involved in inquiries into the collapse.

• 2006

  Related-party loan increases

  [1]First Solution Money Transferen.wikipedia.org

  The interest-free loan to First Solution UK Ltd had increased to £190,697.

• 2005

  Related-party loan appears in accounts

  [1]First Solution Money Transferen.wikipedia.org

  The accounts recorded an interest-free loan of £24,834 to First Solution UK Ltd, a related company.

• 2004

  Company incorporated

  [1]First Solution Money Transferen.wikipedia.org

  First Solution Money Transfer was incorporated as a UK limited company on 14 April with £100 of share capital.

A community-oriented formal remittance provider focused on helping expatriate Bangladeshis in the United Kingdom send money to family members in Bangladesh.

• International money transfer · 2004

  Bangladesh remittance transfers

  The company's principal service enabled expatriate customers in the United Kingdom to send money to family members and other recipients in Bangladesh. Transactions were handled through the company's offices, branches, and affiliated agents, with transfers reaching Bangladesh through arrangements associated with local banks. The service was aimed particularly at the British Bangladeshi community and formed the core of the company's reported turnover.

• 2007

  First Solution remittance collapse

  The company entered liquidation after abruptly closing, reportedly owing approximately £1.7 million to nearly £2 million to members of the public. The collapse affected many customers from Bangladesh's Sylhet region and triggered police, government, and regulatory investigations.

  Source

• 2007

  Questions over licensing and financial safeguards

  Public disagreement over whether the company had appropriate Bangladesh Bank authorization, combined with limited accounting disclosure and uncertainty about the use of customer funds, intensified concerns about oversight of UK-to-Bangladesh remittance providers.

  Source

Read more

• 2007Community compensation campaign

  United Kingdom

  Community leaders and politicians organized rallies, demonstrations, and parliamentary lobbying after customers lost money in the collapse. George Galloway called for a government-backed crisis fund modeled on the response to the Farepak failure.

  Outcome. The government indicated support for establishing a compensation or crisis fund, but the available material does not show the final amount raised or distributed.

  Source

• 2008

  Former agents acquire and relaunch the brandStrategy

  Background

  Following the 2007 liquidation and customer losses, former agents and branch operators sought to preserve the business and address outstanding remittance claims.

  Action taken

  A group of 13 former agents and branch operators reportedly acquired the First Solution brand and restarted trading in May 2008.

  Aftermath

  The new organization stated that it intended to repay affected creditors, but the eventual repayment level and long-term status of the operation are not established by the available material.

  Source

1. 1First Solution Money Transferen.wikipedia.org