UPDATE: FCA cuts Wirecard's UK activity

The Financial Conduct Authority (FCA) has ceased the regulate activities of Wirecard, meaning customer money can no longer be accessed.

Yesterday, Wirecard filed for insolvency, after the company revealed a €1.9 billion black hole in its accounts last week.

Shares in the German payments giant fell by more than 80 per cent after it announced its decision to apply for insolvency at a Munich court. In a statement, the company explained it had made the application “due to impending insolvency and over-indebtedness”.

In response, the FCA imposed a number of requirements on Wirecard including, that the firm: must not dispose of any assets or funds; must not carry on any regulated activities; and must set out a statement on its website and communicate to customers that it is no longer permitted to conduct any regulated activities.

"Our primary objective is to protect the interests and money of consumers who use Wirecard," read a statement. "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 move comes after Wirecard’s chief executive officer Markus Braun resigned and was arrested on suspicion of false accounting, after EY refused to sign off the company’s annual accounts because they were unable to locate €1.9 billion supposedly held in accounts in Asia.

Braun, who is suspected of inflating the company’s finances to appear more attractive to investors, has been freed on bail of €5m and remains a suspect.

Last Friday, Wirecard announced that chief operating officer Jan Marsalek had been removed from the company’s management board and his contract had been terminated.

It also admitted there was a “prevailing likelihood that the bank trust account balances in the amount of €1.9 billion do not exist”.

The scandal threatens to engulf the payments provider, which was once considered a shining light of the German FinTech scene, reaching a valuation of €24 billion in 2018.

The firm employs 6,000 staff in 26 countries.

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