Sunday, October 25, 2020

U.K regulator received warning last year about Wirecard’s transaction laundering


The City regulator was warned last year that Wirecard was allegedly linked to a scheme that used fake online stores to disguise the processing of high-risk payments.

The Financial Conduct Authority was given details of an operation whereby allegedly bogus ecommerce sites were used as a front for channelling online gambling proceeds through the international payments system.

It was provided with evidence of a “transaction laundering” network that had a series of supposed connections to Wirecard, including to the payments processors behind the sites, and to the site operators themselves.

Transaction laundering involves disguising payments to create the false impression that they are unrelated to the true product purchased, allowing payments that may otherwise have been blocked to go through.

- Advertisement -

It is used to disguise everything from the purchase of drugs to weapons, pornography and gambling payments.

In this case, Wirecard was accused of being linked to a scheme to process European gambling proceeds, including to the United States, where online gaming is restricted.

Wirecard, a German payments group, filed for insolvency last week amid an accounting scandal and the arrest of its former chief executive.

There are growing questions about the nature of some of the payments it facilitated.

- Advertisement -

An investigation by Reuters in 2017 alleged that seven European websites, purporting to sell ordinary household goods such as fabric, gift wrap and DVD cases, were “fake outlets”.

When reporters tried to purchase the items, payment was accepted but no delivery was made. Staff on the companies’ helplines said at the time that they did not sell the marketed product, but instead processed gambling payments, mostly for Americans.

It can be revealed that the allegedly bogus sites were owned by UK companies set up by a formations agent which Wirecard staff were shareholders in.

Brinken Merchant Incorporations was shut down in 2015 after a government investigation revealed concerns that shell companies it set up were linked to alleged money laundering.

Payments companies such as Visa and Mastercard rely on transactions being coded so they can block any that may be illegal.

Coding a gambling transaction as an innocuous household item would allow it to pass through the system more easily and is against the rules of Wirecard’s partners, Visa and Mastercard. In some circumstances it is illegal.

The payments identified by Reuters were processed by a Berlin-based company called Deutsche Payment.

In April 2019, evidence was shared with the City regulator by Fraser Perring, a short-seller, that Wirecard owned the Deutsche Payment brand. He noted that helpline staff Reuters spoke to were employed by a company called Agora, a payment services provider that also had alleged links to Wirecard.

Mr Perring, a critic of Wirecard, said he has raised concerns about the business with the watchdog for “four years and four months with a complete absence of public sanction or caution against the [business].

“Was the FCA asleep at the wheel?”

The authority said: “We cannot comment on specific allegations but we treat all such information seriously and take it into consideration in the supervision of our firms.”

- Advertisement -

A spokesman for the Serious Fraud Office said it was “aware of the allegations, but can neither confirm nor deny interest in the matter”.

Wirecard declined to comment. Agora and Deutsche Payment did not respond to an invitation to comment.

Original article on


Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Texas attorney general Ken Paxton fires top aide who accused him of bribery

Lacey Mase, one of the top aides who accused Texas Attorney General Ken Paxton of crimes including bribery and abuse of office, has been fired, she told The...

Latest News

This Week

Crown Melbourne casino faces money laundering probe

Crown Resorts is facing a new threat to its casino licences and the prospect of multimillion-dollar fines after it was informed by Austrac, the...

Fundraiser Elliott Broidy pleads guilty in foreign agent case linked to 1MDB

Major Republican Party and Trump fundraiser Elliott Broidy pleaded guilty Tuesday to acting as an unregistered foreign agent, admitting to accepting millions...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Former North Macedonia PM linked to new money laundering probe

The Organised Crime Prosecution in North Macedonia on Monday confirmed the arrest of Risto Novacevski – the best man of fugitive ex-prime minister Nikola...

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks