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Wirecard drama continues – what about the pink elephant called money-laundering for big illegal organizations?

A few days ago, the public-listed German Fintech superstar Wirecard published the KPMG Special audit report and since then has also publicly commented on it several times. From these statements, we read that Wirecard pretends to believe that the accusations of balance sheet manipulation, irregularities in accounting, kick-back payments, and lack of transparency raised from many sides have been refuted or at least not been confirmed. The accusations of money-laundering in the context of client relationships with cybercrime organizations and scam operators are not dealt with at all. Admittedly, the scope of the special audit of KPMG did not include this pink elephant in the room.

The ex-ante facts

Before judging the KPMG special audit report, the following facts should be noted in the interest of an objective discussion:

  • It is already proven that Wirecard did business with large scam operators such as the Irish-Israeli GreyMountain Management Ltd (GMM) of David Cartu and their satellite companies and processed their payments.
  • It is already been proven that Wirecard facilitated illicit payments for other fraud schemes like Option888 and many others like 24Option (still ongoing), HandelFx, Algotechs/BEALGO, AnyOption.
  • The announcement of Wirecard that they would only process licensed binary option companies made as of March 4, 2020, proved untrue only four weeks later when the German law enforcement agency “Cybercrime Bamberg” clamped down a Wirecard account held for Fibonetix, an unlicenced fraudulent broker as of April 2nd, 2020.

So, even before the KPMG audit report, it was publicly known that Wirecard had facilitated illegal and fraudulent transactions to a large extent with its payment services.

A scary KPMG report and alternative facts

KPMG notes in its special audit report as of April 28th, 2020 that for the biggest part of the revenues recorded in the financial statements of Wirecard for the years 2016 up to 2018 it is not possible to trace the single transaction. Hence, no final judgment can be made for the correctness of the volume shown. In particular, the KPMG report states that

  • Wirecard relied extensively on a network so-called third-party acquirer (TPA) for processing a large proportion of the total transaction volume.
  • the TPAs have also been responsible for the compliance ( KYC checks) with Wirecard stating that “Wirecard would neither track nor monitor these KYC compliance checks carried out by the TPA-Partners”.

During the KPMG special audit, it got evident that neither Wirecard nor the TPAs are evidently willing to provide detailed information on the merchants processed in the period 2016 to 2018 and recorded in the accounting records by Wirecard.

Facilitating cybercrime and illicit merchants

Due to Information from victims represented by the European Funds Recovery (EFRI), we think we know anyway what kind of merchants have been processed by Wirecard: scammers, illegal gaming companies, adult entertainment companies, and so on.

FinTelegram can prove beyond any doubt on the basis of the available documents that, for example, back in 2016 at Wirecard’s partner GreyMountain Management (GMM) and the associated payment processors Seroph APAG, Worldwide Tech, and MegaCharge, processed payments for fraudulent brokers with a value of hundreds of millions of Euros with the deep personal involvement of the former Wirecard UK & Ireland CEO Michelle Molloy and her Family.

After reading the KPMG report, we definitely would like to know who actually did the KYC checks on the GMM merchants back in 2016. Did Wirecard these KYC checks on binary options scam operators or had them outsourced to GMM and/or its related parties which are to be seen as a cybercrime organization?

Based on the KPMG report, it cannot be ruled out that there were many other “GMM types” of merchants.

At this point, it should again be noted that Wirecard holds a banking license in Germany and must, therefore, carry out the corresponding KYC/AML/CTF checks. In case Wirecard outsources these compliance activities Wirecard is nevertheless to be held liable for any wrong-doings of the TPAs.

FOR GOD´s SAKE

In outsourcing KYC to a third party, Wirecard has certain responsibilities in choosing and supervising these third parties. And for sure Wirecard has the right and even the obligation to access the KYC data of its merchants. This is in contrast to what Wirecard told KPMG during the Special Audit : they have no idea about the merchants and no idea on the transaction data.

Having said that, could the competent authorities please finally take action in the interest of injured investors and a clean financial market?

Cybercrime has taken on unprecedented dimensions due to the gigantic binary options fraud industry. It is estimated that by the time it was banned in 2018, consumers and small investors will have been damaged by up to at least $10 billion a year by the binary options alone. Can please someone finally determine how much of this $ 10 billion a year have been processed by Wirecard year by year! And in addition, can Wirecard please tell us how and when they intend to refund the hundreds if not thousands of retail investors out there that have been scammed by its clients and merchants?

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