Following the Wirecard scandal, which has caused shockwaves throughout Germany, the country’s finance minister, Olaf Scholz, has said that he wants to overhaul the oversight system for Germany’s financial system.
In particular, in an interview published on Sunday, Scholz told German weekly Frankfurter Allgemeine Sonntagszeitung that he wants to increase the powers of the Federal Financial Supervisory Authority, otherwise known as BaFin, to conduct unannounced checks at any moment.
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Furthermore, Scholz proposed that BaFin should have oversight of large payment processing companies, despite the fact that they don’t always fall into the category of a financial institution neatly. He also pointed out that it is worth discussing whether auditors need to rotate more frequently.
As Finance Magnates reported, Wirecard AG, a leading fintech company in Germany, went into insolvency following a multi-year fraud that resulted in a €1.9 billion hole in its balance sheet.
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BaFin blamed for not stepping in sooner
Towards the end of June, the company’s accounting responsibilities were given to the market regulator BaFin. As reported by the Financial Times, the decision was made due to the lapses in the part of the Ernst and Young, one of the big-four private audit firms.
The fallout of the payments firm has turned out to be an embarrassment for the country, and even the spokesperson of German Chancellor Angela Merkel called it “a scandal which is almost unprecedented in the world of finance.”
Many are also pointing at BaFin for net stepping in sooner, with reports of irregularities with Wirecard dating back at least five years.
Wirecard AG selling off its subsidiaries
Earlier today, Wirecard Acquiring & Issuing GmbH, the parent company of Wirecard AG, said that it has commissioned Moelis & Company, a United States investment bank to oversee the sales process of Wirecard North America. At the same time, sales processes are also being prepared for other subsidiaries of Wirecard AG.
