Wirecard ordered to cease Singapore payment services

4 years ago 129

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Wirecard has been instructed to stop offering its payment services and return all customers' funds in Singapore. The order comes months after the German payments vendor filed for insolvency in the wake of its accounting scandal.

The Monetary Authority of Singapore (MAS) told Wirecard entities in the city-state to cease their payment services and return customers' funds by October 14 this year.

The industry regulator said in a statement Wednesday that it had been monitoring Wirecard's ability to continue providing its services in Singapore following the company's insolvency filing in Germany, such as keeping customers' funds in Singapore banks and helping them switch to alternative service providers.

Its local office had told MAS it was unable to maintain payment processing services to several merchants. The regulator then determined it was "in the interest of the public" for Wirecard to cease its payment services here, so there was greater certainty for customers to decide on their appropriate course of action, for instance, to look for alternative service providers.

The service cessation would affect credit card payments at local merchants that used Wirecard's services and the use of pre-paid cards issued by Wirecard. Other forms of e-payments such as PayNow and SGQR remain available, said MAS, adding that Wirecard customers that had yet to make alternative arrangements should do so quickly.

According to the regulator, Wirecard's primary business activities in Singapore encompassed processing payments for merchants and helping companies issue pre-paid cards. It noted that Wirecard's local entities currently were not licensed by MAS. Pointing to the country's Payment Services (Exemption for Specified Period) Regulations 2019, MAS said the exemption was established to provide a grace period -- from six months to a year -- for entities providing certain regulated payment services to apply for the relevant licence.

Such entities were permitted to provide the regulated payment service without a licence during the grace period, though, MAS might issue directions to such entities. Effective from January 28, the Payment Services Act governs the provision of payment services in Singapore including merchant acquisition services as well as services already regulated by previous legislations, such as money-changing and cross-border money transfer services.

Wirecard had been embroiled in an accounting scandal in which $2.1 billion was reportedly missing, leading to the arrest of its former chief executive alleged to have inflated the company's accounts. The issue was raised by auditor EY, which identified two banks in the Philippines that allegedly were holding the funds, though, both denied Wirecard was ever a client.

An accounting executive in its Singapore outfit also was involved in fraud allegations, but left the company in April, according to a Bloomberg report, which pointed to several alleged accounting oversights involving some employees based here.