Wirecard ‘link to cash laundering’

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Senior Wirecard employees were linked to an opaque network of British companies associated with alleged money laundering.

Staff from the scandal-hit German payment processor were shareholders in a company creation operation in the northeast of England that was shut down after a government investigation.

The revelations will increase scrutiny of Wirecard’s UK activities as the future of its British subsidiary, which has worked with some of the biggest names in fintech, is weighed up by regulators.

Wirecard’s German parent company filed for insolvency last week amid an escalating accounting scandal and the arrest of its former chief executive.

Its UK subsidiary was kept out of that insolvency process but there are growing questions about the group’s activities in this country.

An analysis of corporate filings reveals the involvement of Wirecard staff in a network of hundreds of shell companies set up in Consett, County Durham, which were connected to pornography, gambling and dating websites.

Some of these companies have been accused of misleading financial organisations over the origins of transactions, raising questions as to why Wirecard staff would be involved in entities allegedly acting against the company’s own partners.

Ordinary residents of Consett were paid to be directors of hundreds of businesses by Brinken Merchant Incorporations (BMI), a company formation agent run by Simon Dowson, a local entrepreneur.

The shell companies provided a way for companies outside of Europe to have an apparently lower risk UK entity, meaning banks and credit card companies would be less likely to block payment for websites such as porn and gambling operators based in Africa, Asia and central America that may otherwise be subject to additional scrutiny.

It can be revealed that BMI’s shareholders included Patrick Mosbach, a former Wirecard sales executive, and Brigette Axtner, executive vice-president of digital sales at Wirecard.

Mr Dowson, 39, said yesterday that Wirecard staff had referred third party clients to BMI. He said that he had no involvement with or knowledge of the resulting shell companies’ activities.

“We were a corporate service provider, providing corporations to their clients, and that’s where it stopped.

“We gave them a UK corporation, if there was any untoward processing going on behind that, it was categorically something we had nothing to do with,” he said.

In 2016, Mr Dowson reportedly told Reuters, whose investigation into BMI uncovered 429 people in Consett serving as directors of more than 1,000 businesses, that he was a specialist in helping online businesses collect cash for high-risk transactions.

Mr Dowson closed BMI voluntarily in 2015 after the government’s Insolvency Service discovered breaches of company law. In total, 38 Consett companies were struck from the corporate register. There have been no charges or sanctions brought against Mr Dowson or any of the directors based in Consett.

The town is 15 miles from Newcastle upon Tyne, where Wirecard’s UK subsidiary, Wirecard Card Solutions, has its headquarters.

Restructuring experts Alvarez & Marsal have been appointed to explore options for the UK business, which is under scrutiny from the Financial Conduct Authority.

Before Wirecard bought Wirecard Card Solutions in 2011, Rudiger Trautmann, 63, the German company’s chief operating officer from 2005 to 2010, served as a director of an obscure British entity called Wire Card UK.

This Consett-based company, dissolved in 2010, was established by Mr Trautmann in 2006 and had links to a company that laundered proceeds from offshore gambling sites to the United States, where online gambling is restricted. It is not suggested that Mr Trautman was involved in or aware of any money laundering.

The US Secret Service found in 2009 that Bluetool Limited, a business serviced by BMI that had a local teacher acting as a director, breached money laundering rules. Michael Schuett, a German citizen, was jailed in the US after admitting running an unlicensed money transmitting business.

He was found to have channelled $70 million from Europe to Florida, including via Bluetool and Wirecard.

Along with links to Wirecard and BMI, Wire Card UK and Bluetool had common shareholders and the same company secretary, British Virgin Islands-registered Bournewood Limited.

Wirecard and its UK subsidiary declined to comment. Mr Schuett could not be reached for comment.

Mr Trautmann, Ms Axtner and Mr Mosbach did not respond to an invitation to comment.

● Simon Dowson told The Times yesterday that legitimate reasons for wanting a UK company to process payments could include lower costs for merchants and fewer chargebacks on credit cards. It was “nothing to do with tricking anybody”, he added.

“Somebody came to me and said, can you set me up a UK company? We had people from the [United] States who wanted European companies, to our belief because they wanted European [payment] processing accounts because that’s where their target market was.

“Whatever Wirecard have been doing at the back end has nothing to do with me. We were a corporate service provider that provided services to them and that’s where it stopped.” Mr Dowson said he had no awareness of any wrongdoing by Wirecard or associated shell companies set up by BMI.

Source: https://www.thetimes.co.uk/

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