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A law firm instructed by the UK financial watchdog to probe the money-laundering controls of Market Financial Solutions in 2024 found it was complying with the rules.
The review, carried out by law firm DWF, into the mortgage lender that collapsed abruptly earlier this year illustrates how the company had been on the radar of regulators long before its recent financial difficulties.
MFS’s collapse amid fraud allegations last month has triggered mounting scrutiny of the Mayfair-based company at the heart of a group of entities created by Paresh Raja that borrowed more than £2bn to finance short-term property loans.
The Financial Conduct Authority on Friday announced a formal investigation into MFS, days after administrators to the group served Raja, who is in Dubai, with a worldwide freezing order. The FCA probe is expected to examine potential breaches of money laundering rules.
However, the watchdog previously ordered DWF to examine MFS’s due diligence and its bringing on board of customers and whether its checks were robust enough to guard against money laundering and terrorism finance, according to two people briefed on the review that was conducted in 2024.
The conclusion of that “skilled person” review was that MFS was found to be operating in line with its requirements under UK money laundering rules, although it recommended some potential improvements, the people added.
“It gave the company a clean bill of health,” said one of the people.
The FCA is worried there may have been insufficient due diligence checks and ongoing monitoring of customers by MFS and its sister companies, which have been linked to a property scandal involving a Bangladeshi politician.
The mortgage lender is one of about 1,200 companies that are classed as so-called Annex 1 firms, which are not fully regulated by the FCA but are registered purely to check they comply with money laundering and terrorist financing risks.
In 2024, the regulator sent a “Dear CEO” letter to leaders of such companies, warning that it had observed “poor financial crime policies, controls and procedures” and calling on them to take “prompt and reasonable steps” to address these shortfalls.
The FCA declined to comment on individual companies, but a spokesperson said: “When we assess firms’ policies and controls we inform them of our findings and, where appropriate, take supervisory action in response.”
The regulator surveyed 300 Annex 1 companies late last year on how they responded to its letter.
“We are following up with a smaller selection of these firms to further understand their business models and activities, as well as how they manage AML risks,” the FCA said. “This work is ongoing and we will consider whether any further action is needed.”
A large part of MFS’s business involved backing dozens of property deals linked to Saifuzzaman Chowdhury, a former land minister in Bangladesh. Along with some of his family members, he built a sprawling $295mn property portfolio from 1992 until August 2024, when the government of Sheikh Hasina in Bangladesh collapsed amid student protests.
MFS-linked entities were listed as being involved in 291 of the 495 charges registered by the companies against properties in England and Wales, the FT reported last year. The UK’s National Crime Agency froze 342 properties linked to Chowdhury, worth about £185mn, in June 2025 as part of “an ongoing civil investigation”.
DWF declined to comment. A spokesperson for Raja declined to comment.