Wirecard to assess Singapore services amid parent's insolvency filing in Germany

WIRECARD has told Singapore regulators it is "assessing" if it can continue providing services in the Republic, with the parent of the German fintech collapsing into insolvency this month after admitting that 1.9 billion euros (S$2.98 billion) in cash on its balance sheet is likely non-existent, amid ongoing investigations into wide-scale accounting fraud.

The Monetary Authority of Singapore (MAS) said on Tuesday that Wirecard's entities in Singapore have complied with MAS's directions to hold customers' funds in segregated accounts with banks in the Republic. It said it is "closely monitoring the operations of Wirecard".

Wirecard processes payments for merchants, and issues prepaid company cards.

"Wirecard has informed MAS that it is assessing its ability to continue providing its services in Singapore in light of the filing for insolvency in Germany by its parent company Wirecard AG," MAS said in a statement.

"Credit card payments at merchants using Wirecard's services, as well as usage of pre-paid cards issued by Wirecard, will be affected if it ceases operations here."

Visa and Mastercard are reportedly looking to end Wirecard's access to their networks for payments processing, Bloomberg said.

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Singapore's regulator on Tuesday said: "MAS has informed Wirecard of our expectations that they promptly notify customers in advance of any disruption to their services."

Wirecard's entities here are currently exempted from licensing, though Wirecard has sent a licence application to MAS under the new Payment Services Act, MAS said.

Checks by The Business Times showed that as at Tuesday afternoon, Wirecard Asia Holding remains a live company in Singapore.

It is unclear how wide Wirecard's reach is in Singapore, though retail payments processed by Wirecard are commonly seen here.

It became a well-known payments player in the Asia-Pacific region after acquiring the customer portfolio of Citigroup's merchant acquiring business in 11 markets in this region, including Singapore.

At the point of that announcement in 2017, Wirecard said that the portfolio of clients in Singapore, Hong Kong, Macau, Malaysia, Taiwan, Indonesia, Philippines, Thailand, India, Australia and New Zealand translated to more than 20,000 merchants in the region.

Reuters reported in 2016 that Citi's merchants acquiring business in Asia-Pacific generated around US$400 million in gross revenues. About 70 per cent of the business was out of Hong Kong, Singapore and India, the report said, citing unnamed sources.

The sale price of that business to Wirecard was not disclosed in the deal announcement.

Wirecard said in 2017 that the expected earnings before interest, taxes, depreciation, and amortisation (Ebitda) contribution from the acquired portfolio would be more than 20 million euros in fiscal year 2019, the first year of it is fully consolidated in the Wirecard group.

On Monday night, MAS said the Singapore police has been conducting a criminal probe into Wirecard's Singapore operations since February 2019. The central bank and the Accounting and Corporate Regulatory Authority are collaborating with the Commercial Affairs Department to scrutinise other possible aspects of the case.

"The investigations are extensive and ongoing," MAS said.

"Due to the cross-border nature of some of the transactions, Singapore authorities have reached out to relevant foreign authorities for further information and also stand ready to assist investigations by foreign authorities where requested."

MAS added that it requires financial institutions to report all suspicious transactions, including transactions that are "large, complex or present unusual patterns with no apparent economic or lawful purposes".

With this, MAS has been in touch with relevant financial institutions to determine if there had been any abuse of Singapore's financial system for illicit purposes.

"We will take firm action if we find evidence of criminal behaviour or serious lapses in anti-money laundering controls."

The Financial Times (FT) was the first media outlet to extensively investigate the accounts of Wirecard.

Wirecard has claimed that the trail of the missing billions in cash was meant to lead to bank accounts in the Philippines.

Yet, the Philippines' central bank has since said this month that no money from Wirecard entered the country's financial system. The two banks named by the German fintech - the Bank of the Philippines Islands and Banco de Oro Unibank - have also stepped out to say publicly that Wirecard has not been a client, reports showed.

FT reported late last week that for more than three years, Wirecard's auditors EY did not request important account information from OCBC where Wirecard claimed it had up to one billion euros in cash held at the Singapore bank. Such checks, deemed a routine part of auditing work, were apparently skipped, as EY depended on documents and screenshots from a third-party trustee and Wirecard, FT reported.

FT cited a source saying that Wirecard has no banking relationship with OCBC, and that the lender did not receive any query from EY over Wirecard from 2016 to 2018. Wirecard's former Singapore-based trustee reportedly does not have an escrow account with the bank too, said FT, citing the same unnamed source.