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European political leaders urge Lithuania to tighten financial oversight after Financial Times reveals prosecutor suspects one regulated fintech it was used to steal more than 100 million euros based in the country Wirecard, A few weeks before the German payment company collapsed.
Stasys Jakeliunas, MEP for the Lithuanian Union of Farmers and Greens, told FT that he hopes the case involving the payment company UAB Finolita Unio will function as a “wake-up call” to the Lithuanian authorities.
“It’s what you’d expect,” he said. “Fintech needs fast oversight and regulation, which is lacking in both the central bank and at least the financial crime investigation service. They are not keeping up with these innovative and fast-paced businesses.”
Jens Zimmermann, a German Social Democrat MP from Berlin, said competition between EU members was in danger of “creating a bottom-up regulatory race” to whitewash fintechs in their countries.
Wirecard began in June 2020 after unveiling a 1.9 million euro balance sheet. Munich prosecutors suspect they have spilled hundreds of millions of euros in bankruptcy and are studying Lithuanian fintech Finolita – which is owned by Singapore’s Senjo Group, one of the business partners that Wirecard could defraud.
Criminal authorities suspect part of the 100 million euro loan, which Wirecard granted to another Senjo Group subsidiary in March 2020 and processed by Finolita, was directed by Jan Marsal, former director of operations at Wirecard, which Interpol wants.
Prosecutors are examining 1.15 million euros in payments from Wirecard to Finolita, according to invoices they question.
Yekaterina Govina, director of the Bank of Lithuania’s financial markets supervision service, said on Monday that Finolita was investigating the country’s central banks “since the beginning of autumn 2020”.
“The investigation is in its final stages and decisions should be published soon,” he said, adding that in Lithuania “there is zero tolerance for money laundering and terrorist financing.” . . he is making every effort to prevent the country ”.
Conservative Lithuanian lawmaker Matas Maldeikis took a similar view and said the Bank of Lithuania was closely monitoring “all financial markets, including fintech companies”. He stressed: “Lithuania is an innovative country where fintech companies are welcome. We were one of the main beneficiaries of this sector after Brexit.”
German Green Party MEP Sven Giegold criticized the Bank of Lithuania for not quickly revoking Finolita’s license after learning of the transactions. “The central bank is pursuing industrial policy to promote the financial sector, rather than regulating the financial sector.”
“The Finolita case proves that fintechs are not adequately overseen,” added German left-wing parliamentarian Fabio De Masi, who serves on the Bundestage’s Wirecard committee.
Elfriede Sixt, the Austrian founder of the European Fund Recovery Initiative, lobbied on behalf of cybercrime and fraud victims, calling Lithuania and Estonia “EU offshore financial services centers” where it obtained licenses to set up e-mails. money institutions, payment service providers, or cryptocurrency organizations “became seemingly very popular and easy-going.”
Lisa Paus, a German Green Party MP, said scandals like the FBME Bank, Wirecard and Finolita have shown that the fight against financial crime is a multinational issue. “The oversight of large payment service providers, as above banks, needs to be taken to the EU level.”
The Lithuanian Ministry of Finance and the European Central Bank, the main bank in charge of the EU, declined to comment.
The main inspection body in the German Bundesrechnungshof has been sued by the German organization for mishandling the Wirecard case.
“None of the various players – the Ministry of Finance and Justice, BaFin, Deutsche Bundesbank, Financial Information Enforcement Panel – initially realized how explosive the case was or took full advantage of their capabilities,” the body wrote to parliament in a document seen by FT. Handelsblatt first reported on the review of the audit body.
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