Wirecard UK ordered to freeze client funds by financial regulator | Banking

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Thousands of people have been excluded from online bank accounts after the city’s watchdog ordered UK payment company Wirecard to freeze customers’ funds.

The Financial Conduct Authority ordered the UK unit of Wirecard, which provided payment services, including loading prepaid travel money cards for companies such as Asda and British Airways, to cease all regulated activity and freeze all of its assets and funds.

The decision, which came after Wirecard’s German parent company filed for insolvency amidst suspected accounting fraud of £ 1.9 billion (£ 1.7 billion), also struck Pockit, Anna Money, and Curve banking app customers who used the company for their services.

Curve, which allows people to use a single card to make payments from any of their bank accounts, has told its 1.3 million customers to carry an alternative card because transactions and transfers money would not be possible due to the freeze.

Curve said Wirecard provided the infrastructure for its service, but did not hold any money from its cardholders.

He was already upgrading to his own systems and said his cards would likely be out of service for days rather than weeks.

Anna Money, a digital banking application for businesses, holds customer money that has been frozen. On his website, he told account holders that their money was “completely safe,” but he didn’t know when it could be accessed.

He added, “He’s still around with a dedicated Barclays account, but you can’t use it right now. “

Travel money providers FairFX and Asda Money said that holders of their prepaid foreign currency cards were unable to use them. FairFX said it was looking for a solution for customers, but their money was safe.

The FCA said that as soon as the company admitted last week that 1.9 billion euros was missing from its accounts, Wirecard UK was advised that it should not pay or reduce the money it holds for its customers, except on his instructions.

“On June 26, we took additional measures to force the company to cease all regulated activities in order to further protect customer money,” said FCA. “This now means that customers’ money is not accessible. Our main goal is to protect the interests and money of consumers who use Wirecard. “

The financial regulator has said that UK customers’ funds will not be protected by the Financial Services Compensation Scheme (FSCS), which covers consumers up to £ 85,000.

“The FSCS only applies to certain types of activities that do not include the issuance of electronic money or payment services,” said FCA.

He stated that under the Electronic Money Regulations of 2011, Wirecard was intended to protect customers’ money, separating it from their own money to ensure that they could protect it and return it if the credit defaulted. ‘business.

He could not say when clients’ money would be released.

FCA’s action comes as former Wirecard number two executive fled to China.

Jan Marsalek, a former board member and chief operating officer in Germany suspected of the Wirecard accounting scandal, allegedly flew to the Philippines on Wednesday.

Menardo Guevarra, the Philippine justice secretary, ordered the authorities to search for Marsalek after his arrival and to investigate his involvement in the alleged fraud that caused the Wirecard collapse.

Bureau of Immigration records show that Marsalek, who was fired from Wirecard on June 22, arrived in Manila on June 23 and left for China from Cebu the next morning, Guevarra told CNN Philippines.

He added that there were no signs of Marsalek on video surveillance at Mactan-Cebu airport.

Guevarra said Marsalek was accompanied by his Filipino wife, which is why he was able to enter the country despite travel restrictions related to coronaviruses.

Two local banks, BDO Unibank and the Bank of the Philippine Islands, are said to have held escrow money for Wirebank, but both said Wirecard was never a customer and that the missing 1.9 billion euros ‘had never entered the Filipino banking system.

On Monday, Wirecard – a member of the leading German DAX index and considered until recently to have huge potential in the growing financial technology sector – admitted that the 1.9 billion euros, which was supposed to be in trust accounts, may never have existed.

Wirecard, which processes tens of billions of euros in credit and debit transactions each year, filed for bankruptcy on Thursday. The company said it had failed to reach an agreement with its lenders that could help it stay afloat. Earlier in the week, Markus Braun, former chief executive of Wirecard, who resigned last week when the scale of the alleged fraud was exposed, was arrested after reporting to police. The 51-year-old was released on bail after posting a 5 million euro bond.

Gareth Shaw, Chief Financial Officer of Which?, Said, “It will be of deep concern to people who have been thrown into limbo and have been unable to access their money, especially since he is currently not clear when they can do it again.

“This decision could have a serious short-term impact on those with few or no other options available. “

He said affected companies should tell clients how long the disruption could last and what help they can provide to help them access their funds.

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