Tier 1 European banks operating boiler rooms? Surely not….

A not for profit funds recovery firm has branded a payment firm owned by Holland’s ING Group as “Netherlands Wirecard”, a slur indeed, also accusing the company of running a boiler room

Earlier this week, FinanceFeeds highlighted the culmination of a long, drawn out affair relating to the demise of Wirecard, in which the European Securities and Markets Authority (ESMA) lambasted ‘inept’ German regulatory authority BaFIN in a public diatribe.

In analyzing ESMA’s tirade, more than a degree of absolute frustration was demonstrated at the regulatory inadequacy which allowed bankrupt payment processing comopany Wirecard to bilk a large number of customers for many years.

Now, further examples of this type of ineptitude and lack of corporate governance are coming out of the woodwork, only this time, a large, Tier 1 European bank is the target of finger-pointing.

The European Funds Recovery Initiative (EFRI) is seeking €7 million in restitution for victims of boiler room scams which were processed by ING-owned Payvision, a company the Viennese not-for-profit entity brands as the “Netherlands Wirecard”.

Billing Payvision as a “huge payment service provider for the scamming industry” the EFRI has produced a stack of documents from legal proceedings against boiler room operatives that appear to show close links to former Payvision CEO Rudolph Booker.

The EFRI alleges that prior to its acquisition by ING, Payvision knowingly processed £131 million pounds in payments that were generated from investment scams. ING terminated it contracts with the fraudulent brands identified by the EFRI in December 2018.

The campaigning group is seeking restitution on behalf of 232 European investors who collectively lost €75 million to the scammers. The EFRI has written to Payvision demanding more than €7 million in compensation, representing the fees the firm charged for processing the fraudulent payments. It has also filed a money laundering complaint to the Dutch central bank.

“In our opinion Payvision is Netherland´s Wirecard – a company helping scammers in big style fraud,” states the claim, and ING says it is aware of the allegations and will not comment on a case that is undergoing legal merit assessments.

In this circumstance, should these allegations prove to carry any sort of weight, it is surprising that the official regulatory authorities – namely banking prudential organizations and ESMA itself – did not get involved at all.

It is all very well ESMA throwing a huge, and quite justified tantrum at BaFIN with regard to its mishandling of the Wirecard debacle, however boiler room activity is very much against the remit provided by regulators in bona fide financial markets centers.

The report by the European Securities and Markets Authority (Esma), identifies a number of “deficiencies, inefficiencies and legal and procedural impediments” in the two-tier German supervisory system, which splits responsibilities for enforcement between BaFin and the Financial Reporting Enforcement Panel (FREP).

Problem areas highlighted include the independence of BaFin from issuers and government, including “a heightened risk of influence by the Ministry of Finance” given the frequency and detail of reporting by BaFin before actions were taken.

Wirecard was a rising blue chip star before its collapse following the discovery of a gaping €1.9 billion hole in its balance sheet and regulatory bodies appeared at times to be more interested in defending the firm against a rising tide of allegations rather than dig deeper into its financial accounts. Esma says Frep’s examination procedures of Wirecard financial reports did not appropriately address areas material to the business of Wirecard, nor the media and whistle-blowing allegations against the firm.

Equally, a lack of information about Wirecard’s employees’ shareholdings was found to raise doubts on the robustness of BaFin’s internal control system regarding conflicts of interest of its employees vis-à-vis issuers

Steven Maijoor, Esma chair, says: “The Wirecard case has once again highlighted that high-quality financial reporting is essential for maintaining investor trust in capital markets, and the need to have consistent and effective enforcement of that reporting across the European Union.”

“Today’s report identifies deficiencies in the supervision and enforcement of Wirecard’s financial reporting. The report’s recommendations can contribute to the review of the German regime for supervision and enforcement.”

The outcome is likely to lead to an overhaul of the German supervisory regime to address the limitations in the two teir reporting system and the respective roles of BaFin and Frep.

Should these allegations against Payvision prove correct, comparing it to Wirecard would be a mild slur indeed.



Read this next

Institutional FX

Finalto expands NDFs line-up with Taiwanese dollar

Finalto announced today that it has expanded its non-deliverable forwards (NDFs) offering with the addition of Taiwan’s dollar to its trading platform.


It’s time for FX to Harness Crypto’s Potential

Jonathan Cumberlidge, FX Sales Director for BVNK, makes the case for cryptocurrencies in improving the efficiency and flexibility of foreign exchange trading.

Digital Assets

Owner of OptionMint, OptionKing, and OptionQueen gets 30 months in prison

A US federal judge has sentenced Ohio resident Jared Davis, who was found guilty for his participation in a multi-million fraud scheme carried out by Israeli-run binary options websites.

Executive Moves

iS Prime co-founders Raj Sitlani and Jonathan Brewer leave, but “business as usual”

“For our clients and teams at iS Prime, iS Risk and iS Prime Hong Kong, it is business as usual. We will be increasing our investment in our technology and staff, putting our clients first as we drive the business forwards to maintain our market leadership position.”

Digital Assets

Germany-focused DekaBank taps METACO for digital asset custody offering

“Digital assets are a critical part of the future, a radical new way for how assets will be represented, from currencies to real estate.”


Eventus launches AML solution for TradFi and digital asset space

“Firms operating in traditional financial markets and digital assets alike are facing greater challenges than ever to protect themselves from those presenting a risk to their businesses and reputations, along with their standing with government regulators.”

Industry News

Qomply launches direct-to-FCA trade report solution that bypasses ARM

“Certainly, for back-reporting large volumes of data, QomplyDirect removes extra ARM fees by offering the flexibility of sending reports directly to the FCA via a firm’s own infrastructure.”

Executive Moves

BNP Paribas AM appoints Geoff Dailey as Deputy Head of US Equities

“Geoff has more than 20 years’ experience in the industry and as a key, senior member of the team with a strong investment pedigree and leadership profile, he is the natural successor for Pam.”

Retail FX

BUX joins forces with BlackRock for iShares ETFs offering in 7 European countries

“By joining forces with Blackrock, a renowned expert in financial markets and products, we have created a good solution for clients that are overwhelmed by the choice of products and don’t know how and when to start investing. Together, BUX and BlackRock can make a real impact on how Europeans invest and approach their financial future.”