07 Jul 2020
Mastercard was warned about Wirecard’s links to an alleged laundering network in 2016, The Times can reveal.
The payments group was handed details of Wirecard’s alleged links to a scheme that used bogus online stores to disguise the processing of high-risk payments, and Mastercard executives privately admitted to concerns about the scandal-hit company’s handling of high-risk transactions.
Mastercard and Visa provide global payments networks that help to process hundreds of billions of transactions. Wirecard depends on licences from them to operate.
It was claimed that fake ecommerce sites with a series of supposed connections to Wirecard were being used as a front for channelling online gambling proceeds through Mastercard’s system. Evidence was passed to Paul Paolucci, a vice-president at Mastercard, and Howard Fields, head of anti-money laundering, that their network was allegedly being compromised by “transaction laundering”.
This involves disguising payments to create the false impression that they are unrelated to the true product or service purchased, allowing payments that may otherwise have been blocked to go through, for example channelling gambling proceeds to the United States, where the activity is restricted.
Communications reviewed by The Times show Mastercard said at the time that the allegations, if true, could be a violation of Wirecard’s licences.
Mastercard said that it had investigated the evidence and that it “took action to ensure participants in our network comply with our rules”, but it declined to say what the action was.
In 2016, Mr Paolucci informed the individuals who provided the information that “severe action” had been taken previously against Wirecard and other third parties over similar alleged violations.
By James Hurley, The Times, 7 July 2020
Read more at The Times
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