Commerzbank Warned BaFin of Wirecard Concerns in Early 2020: FT
13 Jan 2021

Commerzbank warned Germany’s financial watchdog in early 2020 of money laundering risks at Wirecard following the conclusion of an interview review launched the previous year, the Financial Times reported Tuesday.

The review, which had been launched by the German lender in the wake of media reports of accounting discrepancies at Wirecard’s Asian division, prompted Commerzbank to begin cutting its ties with the payments firm in the latter half of 2019, the newspaper reported. As a lender to Wirecard, Commerzbank ultimately lost €175 million when the company collapsed in June of last year in what became one of Europe’s largest-ever accounting fraud scandals.

The report comes amid a German parliamentary inquiry into allegations of fraud at Wirecard, including those involving its 2015 acquisition of two Indian payments companies in a deal backed in part by Commerzbank and Deutsche Bank, the FT said. Commerzbank’s role in the acquisition was among the the disclosures made by the lender in a detailed presentation provided to BaFin in January of last year, the news outlet said.

BaFin officials concluded at the time that there was “no immediate regulatory reason to act” since the agency was already aware of many of the issues cited in the presentation, according to the report. Although Commerzbank had terminated its correspondent banking services for Wirecard in 2019, it remained part of a consortium of 15 banks providing a revolving credit facility to the firm.

That both Commerzbank and BaFin had knowledge of potential criminality by Wirecard “undermines the view” that the German government and the institutions tied to the payments company were “powerless” to act, German MP Fabio De Masi told the newspaper.

“If Commerzbank pulled out of its correspondent banking relationship with Wirecard Bank in September 2019, why didn’t the lender also sever its credit relationship?” he asked.

Read the full report here

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