Allied Wallet, an online payment provider and a client of Wirecard, settled with the Federal Trade Commission (FTC) last month over charges that it helped facilitate fraud and launder money, according to a report by the Financial Times.
The settlement scrutinizes concerns about anti-money laundering practices at Wirecard. The FTC said Allied Wallet aided in the scamming of upwards of $110 million from people using pyramid schemes and illegal debt collection.
The company was also accused of setting up fake shell companies and websites to hide its activities. One bogus debt collection company pretended to be offering blankets, housewares, paint supplies and hiking equipment.
Allied Wallet used shell companies in the U.K. to hide non-EU merchants, a move that the FTC said enabled U.S. merchants to evade the generally stricter regulatory framework of the U.S. financial system.
The company utilized Wirecard as an acquirer, which means it is a financial institution tied to the big card networks. The relationship between the two entities lasted from 2013 to 2018.
Wirecard said it was only one of many processing partners for Allied Wallet, and that measures were taken when noticing any irregularities or suspicious transaction patterns, including termination of merchant accounts and reporting to law enforcement authorities.
Wirecard is under scrutiny over whether its rapid expansion has overtaken its internal controls. A German newspaper reported that Wirecard allegedly processed payments for binary option schemes under investigation by Germany and Austria.
The binary option scheme being investigated is Option888, and is being named as a Wirecard customer. Banc de Binary, which was closed in 2017 by U.S. regulators, was also a client, according to the Financial Times.
Wirecard said it actively terminated the customer relationship with Option888 in 2016 after noticing suspicious transaction patterns, and that public prosecutors have already confirmed they are not investigating Wirecard and they have not indicated any intention to do so.
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