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Germany looks to point the finger; China improves its AML measures & the UK pays snitches nearly £500,000.

Germany will begin questioning officials on the Wirecard scandal, while China finally takes steps towards improving their AML measures and the UK pays snitches to catch out tax evaders.

Antonis Melis
September 4, 2020

The Wirecard scandal has become one of the biggest headlines of 2020, and Germany will now begin looking into how it slipped through the cracks of what is meant to be a solid system.

China also begins to add larger penalties to those who are caught laundering money, but these are only baby steps for China’s AML defence, which lags behind the rest of the world.

Here in the UK the HMRC has been paying snitches to rat out tax evaders. Could these actions serve as a role model to AML enforcement as they often struggle to get words from potential whistle blowers?

More on these stories below.

How China Plans to Catch up with Money Launderers

In the past year or two, China's anti-money laundering efforts have drawn increasing attention in international financial circles. The People's Bank of China (PBOC) has been ramping up the punishment of financial institutions that fail to guard against money laundering.

In the first six months of 2020, the PBOC issued penalties of more than 370 million yuan (£40.7 million) for money laundering violations, exceeding the total for all of 2019, data from the central bank showed.

The significant increase in fines reflects a revision in the way the central bank calculates punishment for financial institutions that fail to guard against money laundering. Such institutions would previously receive only one fine at a time regardless of how many rules they broke. Now, multiple penalties are imposed for multiple violations. The largest single fine the central bank imposed exceeded 100 million yuan (£11 million).

These are China’s first steps in improving its lax approach towards money laundering. Hopefully we can see more action coming out of one of the world’s biggest countries.

Wirecard Inquiry Probes: Why Germany Missed Fraud of Century

Germany’s blame game over Wirecard AG’s collapse is focusing on why authorities failed to take a harder look at the payments company before it became the country’s biggest accounting scandal in living memory.

At the heart of the issue is whether German officials knowingly turned a blind eye to issues because of the prospects of establishing a home-grown technology leader. Wirecard boasted that it would revolutionise payments with faster electronic transactions and more services for consumers and companies.

Those ambitions collapsed when it filed for insolvency in June after saying that a quarter of its balance sheet didn’t exist. German prosecutors subsequently said that Wirecard’s 3.2 billion euros ($3.8 billion) of debt are most likely lost.

Germany will begin questioning officials at the start of next week, in the hopes of narrowing down the blame.

£473k in Payouts for Those Snitching on Tax Dodgers

The taxman has boosted payments to those tipping it off about tax dodgers. They include disgruntled employees and spouses who “know where the bodies are buried”, says the law firm RPC.

HM Revenue & Customs (HMRC) paid £473,000 to informants in the 12 months to April 2020 — up from £290,250 in the same period the year before.

We wonder if a similar scheme would hold water in financial crime and compliance. Recently, there have been multiple stories illustrating the negative culture towards whistle blowing. Last year the BBC reported on tow high profile cases that resulted in whistle-blowers being ostracised and thrown out of their industry. We also have to ask if empowering whistle blowers may have prevented the Wirecard case and Germany’s current plight surrounding it.

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