Unraveling of Wirecard and missing $2b–Where was oversight?

Governance and Compliance mysteries abound in alleged financial crimes at Wirecard

If you’re following the falling-apart of the German FinTech giant Wirecard, you’re probably scratching your head about how the allegedly fraudulent activities persisted for so long and at such scale.

New York Times business reporters on the European beat have been trying to figure out the gargantuan lapses in Compliance and Governance. The early leads provide shocking details.

Skeptics of the company’s meteoric rise have long questioned “murky accounts and income that could not be traced.” But Markus Braun, the now-disgraced CEO, always punched back hard at critics. And he possessed great skill in selling eager investors on his claims of massive growth and revenues.

Much of those claims appear now to have been a house of cards. Wirecard has filed for insolvency amidst an accounting scandal centered on approximately $2 billion on its books that appears never to have existed.

Investigators in various countries are working to untangle the various threads of alleged fraud and possible money laundering. According to the Times report, German prosecutors last week accused Braun of “inflating sales volume with fake income to lure investors.”

And authorities in the Philippines seek to determine whether the missing $2 billion was ever actually deposited in banks there, as claimed by Wirecard.

BaFin and EY in glare of spotlight regarding oversight, accounting

While Wirecard and its executives will have to answer for their alleged fraud, another complex angle in this case lies in the relative absence of scrutiny by BaFin. BaFin is the financial regulator of Germany. And there are major questions about the work of auditor EY, as well.

Critics have questioned the rise of Wirecard for years, but these critics assert they experienced high levels of harassment for speaking out about their concerns. And BaFin chose to investigate the critics rather than their claims. Part of the complexity was that some of the critics were short-sellers. But still….

BaFin now finds itself on the hotseat as it tries to explain its past inaction related to a drumbeat of concerns about Wirecard. And the firm’s auditor, EY, now faces lawsuits from shareholders for not drawing the line with alleged irregularities earlier.

In fact, that Wall Street Journal report cites EY emails it viewed that reference accounting irregularities related to trust accounts as early as 2016. At present, EY asserts that it was duped by Wirecard’s alleged fraud along with everyone else.

Visit the New York Times to read the in-depth article about allegations related to Wirecard and the apparent lack of oversight even amidst frequent red flags over time.

Governance, Risk, and Compliance: Nail it every time with RegTech Platform and AML Ecosystem

With AML Partners’ platform technology for RegTech, updating and upgrading your AML and eGRC software solutions is easier, faster, and much less expensive. Contact us today to explore how platform technology and our end-to-end AML Ecosystem powered by the RegTechONE platform–can transform the efficiency and effectiveness of your unique AML Compliance efforts. RegTechONE software for AML Compliance includes fully integrated modules for CDD KYC software for on-boardingbehavior and transaction monitoring software, and sanctions screening software for comprehensive AML screening. And AML Partners simplifies your end-to-end fully integrated AML Compliance efforts even further with an optional Subpoena Search module for FinCEN 314a and similar subpoena searches. Contact us today to learn about our proof-of-concept option or schedule a demo of RegTechONE, the AML software ecosystem. With extraordinary configurability and built for API extensibility, the RegTechONE AML software platformpowers not only an end-to-end AML software solution but also vendor managementAML client lifecycle managementeKYC Golden RecordsPerpetual KYC, and so much more.

Start achieving more today.

We are so confident in the power of RegTechONE to transform your GRC and AML Compliance solutions that we will prove it to you. Contact us today to experience all the ways that RegTechONE is The Power of Everything.

AML Partners logo/wordmark in white

347 Village Street
Concord, NH USA 03303

Copyright © 2023 AML Partners. All rights reserved.