Singapore has ordered Wirecard to cease payment services in the city state, marking the most dramatic regulatory intervention in the German payment group’s remaining operations since its collapse in June.

The Monetary Authority of Singapore, the country’s de facto central bank, said on Wednesday that it directed Wirecard entities in Singapore to cease payment services and return all customers’ funds by October 14. 

“MAS has been monitoring the impact of Wirecard AG’s insolvency on the ability of Wirecard SG to continue providing payment services in Singapore,” the MAS said in a statement. “Wirecard SG has informed MAS that it is unable to continue providing payment processing services to a significant number of merchants. MAS has assessed that it is in the interest of the public for Wirecard SG to cease its payments services and promptly return all customers’ funds”.

Credit card payments at merchants using Wirecard’s services as well as pre-paid cards issued by the German group will be affected, the regulator said. “Customers who have not yet made alternative arrangements are encouraged to do so promptly,” it added. 

Wirecard services are widely used in Singapore, where cafés, bars and restaurants across the island operate the company’s payment terminals.

In 2017, Wirecard acquired 20,000 merchant clients of Citibank, spread over 11 Asia-Pacific countries, in an ambitious deal that was intended to make the company a household name across the region. Citigroup said it had exited the business globally.

Once the darling of Germany’s fintech sector, Wirecard collapsed into insolvency in June after admitting that about €1.9bn in cash was missing from its accounts. The Financial Times last year reported allegations of fraud at Wirecard’s Asia headquarters in Singapore, prompting a police raid at the company’s offices and the launch of a criminal investigation. 

READ ALSO  France broadens retail investor access to private equity

In July, Singapore expanded its probe by launching a criminal investigation into two companies with ties to the German fintech. It also charged a Singaporean businessman involved in one of these companies with falsification of accounts. He is accused of playing the role of trustee for fake bank accounts, which Wirecard told auditors were filled with cash. The businessman’s lawyer and the other entity at the time declined to comment.

After Wirecard’s collapse in June, the MAS required it keep customer funds derived from activities on the island in segregated accounts with Singapore’s banks. 

Wirecard was not regulated by the MAS and required no licence to operate in the jurisdiction when the FT first reported fraud allegations at the group’s Singapore offices. A new payment services act with an expanded breadth of coverage came into force in January. Wirecard has since been operating under a grace period for companies involved in activities now subject to regulation in order for them to apply for an MAS licence. 

Wirecard did not immediately respond to requests for comment.

Via Financial Times