Module 3 · Chapter 8

Regulatory, Compliance and AML

When the target holds a licence, the regulator decides whether the deal can happen and when. This chapter shows how to check the licence, plan around the regulator's approval and handle a regulator's letter.

≈ 12 min read 8-question test

In this chapter

Why the licence is the asset, and how to check it
How the regulator's approval of the buyer sets the deal timetable
Why a known problem needs an indemnity, not a warranty

8.1Regulatory diligence in one paragraph

Some businesses may trade only with a regulator's permission. For them the permission is the business, so the review of the licence leads the diligence. On Project Sunrise the target, Solaris, holds a licence from the Central Bank of Ireland (the CBI) to provide crypto-asset services.

The regulatory workstream confirmed that the licence covers what the group does. It built the CBI's approval of Atlas into the deal timetable. It also found a CBI letter about past failures in anti-money-laundering checks, and that letter became an €8 million indemnity in the SPA.

Key point

Regulatory diligence asks four questions:

Is the licence real and in good standing?
Does it cover everything the group does, everywhere it does it?
Will the regulator accept the new owner, and when?
Does anything in the file threaten the licence or the price?

Also in this chapter

Why the licence is the asset
The perimeter: what each company actually does
Checking the licence itself
The regulator must approve the buyer
Building the approval into the SPA
The letter in the compliance folder
Why warranties cannot cover a known problem
From recommendation to SPA clause
Reading the whole anti-money-laundering system
Your job

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