MAS says Wirecard in Singapore must keep customer funds in banks here; former CEO arrested

Wirecard's primary business activities in Singapore are to process payments for merchants and help companies issue prepaid cards. PHOTO: EPA-EFE

SINGAPORE - German payments firm Wirecard's entities in Singapore are required to keep customer funds from their activities in banks here pending their application for a licence, said the Monetary Authority of Singapore (MAS) on Tuesday (June 23).

Wirecard's primary business activities in Singapore are to process payments for merchants and help companies issue prepaid cards.

The regulator said it has received a licence application from Wirecard under the Payment Services Act, which provides for a grace period for entities conducting regulated activities to apply for the relevant licence. During such a time, MAS may issue requirements to the entities and allow them to carry on with regulated activities.

The Act came into force on Jan 28 and is aimed at safeguarding against money laundering and terrorism financing, as well as strengthening consumer protection in the use of e-payments.

MAS' statement came just before German prosecutors on Tuesday announced that Wirecard's former chief executive, Markus Braun, has been arrested on suspicion of market manipulation, after the payments provider admitted that 1.9 billion euros (S$3 billion) missing from its accounts likely "do not exist".

Current investigations show that "the conduct of the accused justifies the suspicion of inaccurate presentation concurring with market manipulation," prosecutors from Munich said in a statement.

Braun, who resigned last week, turned himself in on Monday evening and will be presented to a judge on Tuesday who will decide on whether he will remain in custody, Reuters reported.

The one-time investor darling is holding emergency talks with its banks, which are owed roughly 1.75 billion euros, to avert a looming cash crunch triggered by the missing money, it said. Wirecard has also lost most of its market value in less than a week.

The Straits Times has contacted Wirecard Singapore for comment.

Last year, Singapore police raided Wirecard's premises following allegations of fraud at its local office.

Prosecutors said in March 2019 that eight Wirecard subsidiaries were under investigation in a criminal probe of suspected forgeries, falsified documents, money laundering and round-tripping of funds to support false transactions that were believed to have taken place between 2014 and 2018.

Round-tripping is where sales and profits are faked by sending money to a third party, who then uses it to buy goods and services from the sender in a pretence of real commerce.

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