UK Watchdog Freezes Wirecard’s Funds During Probe

UK Watchdog Freezes Wirecard’s Funds

The United Kingdom’s financial watchdog agency has ordered Britain’s Wirecard subsidiary to freeze the German payment company’s funds as regulators determine the next steps, The Wall Street Journal reported.

As a result of the ruling by the Financial Conduct Authority (FCA), Wirecard Card Solutions’ customers will not have access to their accounts.

“On 26 June, we took additional measures to require the firm to cease all regulated activities in order to further protect customer money,” the FCA said. “This now means customer money cannot be accessed. Our primary objective is to protect the interests and money of consumers who use Wirecard.”

Wirecard Card Solutions told the Financial Times that it is taking steps to lift the suspension so business can resume as usual.

“We will provide further updates on our website as soon as we can,” the company’s spokesperson told the newspaper.

The decision follows revelations that Wirecard’s independent auditing team, Ernst & Young, could not verify $2.1 billion in deposits made to a pair of Philippines banks.

This week, Wirecard filed for insolvency protection from a German court.

The FCA said Wirecard’s business in the U.K. wasn’t covered by the Financial Services Compensation Scheme (FSCS), which protects consumers from failed financial businesses, the WSJ reported. 

Ernst & Young told the Journal that there were “clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception.”

Curve, one of the companies that uses Wirecard services, advised customers to carry an alternative card for payments.

“Curve customers have been informed that they are likely to see a temporary disruption to their service and are advised to carry an alternative payment method,” the company told the newspaper. “In April, Curve announced we would bring more processes in-house and move away from a reliance on Wirecard. This disruption is expected to last for a limited time only and we are focused on completing this transition as quickly as possible.” 

Menardo Guevarra, the Philippine secretary of justice, said that Jan Marsalek, a former Wirecard board member and chief operating officer, flew to the Philippines on Wednesday (June 24).