Mastercard Exec Reportedly Linked to Suspect Transactions at Cyprus Bank
Controversial German payments processor Wirecard the issuer
of several crypto debit cards has been implicated in a new report on alleged
criminal activities by a Mastercard executive operating at the troubled FBME
bank in Cyprus.
In 2014, the United States’ Financial Crime Enforcement
Network had banned U.S. financial institutions from dealing with FBME after the
bank was accused of being used to “facilitate money laundering, terrorist
financing, transnational organized crime, fraud, sanctions evasion and other
illicit activity.”
The allegations included facilitiating the processing of
money tied to the Syrian chemical weapons’ program and internet child sex
abuse, according to a July 27 report from The Times.
FBME is reported to have ties to Wirecard via an unnamed key
client, which has itself recently become mired in its own scandal after being
unable to account for a missing $2.1 billion in cash on the company books.
The uncovering of the missing funds spurred Wirecard to file
for insolvency and resulted in the arrest of the firm's CEO, Markus Braun, in
Germany. Wirecard’s chief operating officer, Jan Marsalek, is alleged to be
hiding in Russia, where he is thought to be relying on funds transferred using
cryptocurrency.
In the latest chapter of the saga at FBME, an unnamed
Mastercard executive has been accused by private investigators of a money
laundering cover-up using a system of “phantom transactions” designed to thwart
detection by Visa and Mastercard’s anti-fraud and money-laundering checks.
The system allegedly worked by pinging phantom transactions
back and forth between firms, thereby diluting the incidence of suspicious (red
flag) transactions within a higher artificially inflated volume of hundreds of
thousands of apparent transactions.
A spokesperson for FBME’s shareholders has dismissed the
fresh allegations as being fantastical and unproven, stating that the court has
not found the private investigators’ findings to be “supported by any evidence
base.”
A Mastercard spokesperson told Cointelegraph that none of
the alleged links between FBME and Wirecard have been proven. It further told
reporters that it “maintains a rigorous enforcement process” for payment
processors, which can involve fines and/or the suspension of licenses.
In a report today from the Wall Street Journal, Wirecard is
alleged to have miscoded gambling transactions and to have had high levels of
stolen card purchases and reversed transactions.
In response, both Visa and Mastercard are alleged to have
each imposed fines on Wirecard in excess of $10 million over 10 years ago.
Sources have claimed that Visa executives raised concerns about the German
payments processor since at least 2015.
Wirecard is also being investigated by the U.S. Department
of Justice over its possible role in an alleged $100 million bank-fraud
conspiracy connected to the marijuana marketplace Eaze Technologies Inc.
Following a temporary suspension amid the unfolding scandal,
the United Kingdom’s financial regulator recently reactivated the Wirecard
subsidiary responsible for issuing Visa crypto debit cards.
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