How Germany is planning to prevent another Wirecard scandal
Germany's finance minister has drawn up reforms to give financial regulator Bafin more powers, according to a draft seen by AFP Friday, after the collapse of disgraced fintech group Wirecard exposed gaps.
Under minister Olaf Scholz's plan, Bafin will be given the power to intervene directly, bypassing the current two-tier system that splits supervision between a private-sector watchdog and the markets regulator.
Auditors would also have to be replaced every ten years instead of the 20 years currently.
"There will never be a 100 percent protection against criminal behaviour in the financial market," said the draft.
READ ALSO: Five things to know about Germany's Wirecard scandal
"At the same time, criminality must be countered through all legal means... that includes preventing such violations through sufficiently strict controls and oversight."
The German fintech company crashed in June after admitting that €1.9 billion on its balance sheets likely didn't exist.
Prosecutors said Wednesday they have arrested the former chief executive and two former board members of Wirecard for "commercial fraud" reaching €3.2 billion, saying investigations show that the financial scam was already happening in 2015.
The collapse of the payments provider shocked the nation and has since snowballed into a political hot potato for the government.
Scholz is due to be grilled by parliament's finance committee on July 29th after it emerged that he had been aware of suspicions of misconduct at the company in early 2019.
The case is also proving to be embarrassing for Chancellor Angela Merkel who had on a trip to China discussed Wirecard's planned foray into the Chinese market.
Bafin meanwhile has also come under pressure, with a group of investors filing a suit against it in Germany, accusing it of failing in its duty to investigate Wirecard and thereby prevent market manipulation.
READ ALSO: Why Germany's finance minister has come under fire over Wirecard scandal
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Under minister Olaf Scholz's plan, Bafin will be given the power to intervene directly, bypassing the current two-tier system that splits supervision between a private-sector watchdog and the markets regulator.
Auditors would also have to be replaced every ten years instead of the 20 years currently.
"There will never be a 100 percent protection against criminal behaviour in the financial market," said the draft.
READ ALSO: Five things to know about Germany's Wirecard scandal
"At the same time, criminality must be countered through all legal means... that includes preventing such violations through sufficiently strict controls and oversight."
The German fintech company crashed in June after admitting that €1.9 billion on its balance sheets likely didn't exist.
Prosecutors said Wednesday they have arrested the former chief executive and two former board members of Wirecard for "commercial fraud" reaching €3.2 billion, saying investigations show that the financial scam was already happening in 2015.
The collapse of the payments provider shocked the nation and has since snowballed into a political hot potato for the government.
Scholz is due to be grilled by parliament's finance committee on July 29th after it emerged that he had been aware of suspicions of misconduct at the company in early 2019.
The case is also proving to be embarrassing for Chancellor Angela Merkel who had on a trip to China discussed Wirecard's planned foray into the Chinese market.
Bafin meanwhile has also come under pressure, with a group of investors filing a suit against it in Germany, accusing it of failing in its duty to investigate Wirecard and thereby prevent market manipulation.
READ ALSO: Why Germany's finance minister has come under fire over Wirecard scandal
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