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German finance watchdog comes under pressure from MEPs over Wirecard scandal, is accused of ‘economic nationalism’. Calls for a single EU supervisor grow

The Vice President of Renew Europe Luis Garciano has criticised the ‘economic nationalism’ involved in Germany’s controversial investigations of payment processing company Wirecard.

Speaking at a European Parliament debate over the role of financial supervisory bodies, the Spanish MEP said the problem is an ongoing issue that was present in other recent fallouts such as the Danske scandal, and the recession of the late 2000s.

He suggested that financial institutions regularly benefitted from their home national regulator giving better assessments than were really deserved.

Garciano laid blame on German financial regulator BaFin for being part of this trend.  

He was responding to comments from German Minister of State for Europe Michael Roth who, despite stressing that it was important for Germany to reclaim confidence in its capacity as a regulator, the answer could not be “pointing a finger at supervisory authorities.”

“We have to draw the right conclusions from this fraud scandal,” Roth told the European Parliament. “There are other areas to be addressed urgently… We have to look at auditory rules, discuss conflicts of interest between consulting and auditing businesses. We need to make sure rules are properly balanced.”

Garciano rejected this assessment and called for a “single banking supervisor” to overcome the problem of economic nationalism.

“What Mr Roth has said is a denial of the reality of what we see,” he said.  

“As long as we have national regulators overseeing their national champions, they will have the incentives to turn a blind eye. We need a common supervisor at the European level and to stop with discoordination.”

His comments come amid EU-wide calls to establish a centralised finance watchdog alongside stricter rules to better catch and sanction against scandals like Wirecard

Despite this, Dutch MEP Dorian Rookmaker expressed scepticism that they would make any difference.

“More rules will not improve the situation,” she told Parliament. “As a former chief risk officer, I assure you that there’s no industry that’s more regulated than the financial industry.”

“BaFin should wake up and take some responsibility. How is it possible for the COO to disappear in this age of digital control? If BaFin does not do its job, Germany will lose its reputation.”’

The Wirecard scandal began to unravel in early 2019 when the Financial Times ran reports or irregularities in Wirecard’s accounts. Following a revelation that €1.9 billion in quoted monetary assets did not actually exist, Wirecard filed for insolvency in June 2020.

Former COO Jan Marsalek, wanted for a suspected central role in the scandal, has been missing since fleeing from authorities around the same time.

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