Controversial German payments processor Wirecard — the issuer of several crypto debit cards — has been implicated in a new report on alleged criminal activities by a Mastercard executive operating at the troubled FBME bank in Cyprus.
In 2014, the United States’ Financial Crime Enforcement Network had banned U.S. financial institutions from dealing with FBME after the bank was accused of being used to “facilitate money laundering, terrorist financing, transnational organized crime, fraud, sanctions evasion and other illicit activity.”
The allegations included facilitiating the processing of money tied to the Syrian chemical weapons’ program and internet child sex abuse, according to a July 27 report from The Times.
FBME’s purported ties to Wirecard
FBME is reported to have ties to Wirecard via an unnamed key client, which has itself recently become mired in its own scandal after being unable to account for a missing $2.1 billion in cash on the company books.
The uncovering of the missing funds spurred Wirecard to file for insolvency and resulted in the arrest of the firm’s CEO, Markus Braun, in Germany. Wirecard’s chief operating officer, Jan Marsalek, is alleged to be hiding in Russia, where he is thought to be relying on funds transferred using cryptocurrency.
In the latest chapter of the saga at FBME, an unnamed Mastercard executive has been accused by private investigators of a money laundering cover-up using a system of “phantom transactions” designed to thwart detection by Visa and Mastercard’s anti-fraud and money-laundering checks.
The system allegedly worked by pinging phantom transactions back and forth between firms, thereby diluting the incidence of suspicious (red flag) transactions within a higher — artificially inflated — volume of hundreds of thousands of apparent transactions.
A spokesperson for FBME’s shareholders has dismissed the fresh allegations as being fantastical and unproven, stating that the court has not found the private investigators’ findings to be “supported by any evidence base.”
A Mastercard spokesperson told the Times that while the company would not comment on the FBME case, Mastercard “maintains a rigorous enforcement process” for payments processors, which can involve fines and/or the suspension of licenses.
Mounting suspicion about Wirecard
In a report today from the Wall Street Journal, Wirecard is alleged to have miscoded gambling transactions and to have had high levels of stolen card purchases and reversed transactions.
In response, both Visa and Mastercard are alleged to have each imposed fines on Wirecard in excess of $10 million over 10 years ago. Sources have claimed that Visa executives raised concerns about the German payments processor since at least 2015.
Wirecard is also being investigated by the U.S. Department of Justice over its possible role in an alleged $100 million bank-fraud conspiracy connected to the marijuana marketplace Eaze Technologies Inc.