The UK’s Financial Conduct Authority (FCA) announced today it has ordered Wirecard UK to cease all regulated activity after the parent company recently filed for insolvency in Germany.
Wirecard Card Solutions Limited (FRN 900051) is authorized and supervised by the FCA to issue e-money and provide payment services including, issuing e-money onto prepaid cards.
With the Munich-based parent firm entering insolvency proceedings following a multi-year fraud that resulted in a €1.9 billion hole in its balance sheet, the FCA has imposed restrictions on Wirecard UK to freeze all assets and funds until further notice.
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“Our primary objective is to protect the interests and money of consumers who use Wirecard,” the FCA stated.
Huge accounting fraud
“Following last week’s news of €1.9 billion missing from the accounts of the German company, Wirecard, we immediately placed requirements on the firm’s UK business so that it should not pay out or reduce any money it holds for its customers except on their instructions. On 26 June, we took additional measures to require the firm to cease all regulated activities in order to further protect customer money. This now means customers money cannot be accessed,” the regulator noted.
The action could cause inconveniences for UK fintech firms, which rely on Wirecard services for operational support. These include the likes of Revolut, Pockit, Soldo, Anna Money, and Curve.
The FCA said that firms that outsource some operational functions to Wirecard should contact their relevant Supervision contact to discuss the contingency plans they have in place.