Lithuania Defends Oversight as Germany Points Finger on Wirecard

(Bloomberg) -- Lithuania dismissed accusations by German lawmakers of lax supervision after a report that a financial-technology startup it licensed was used to steal more than 100 million euros ($122 million) from Wirecard AG weeks before it collapsed.

The Baltic country acted as soon as information became public about Wirecard's demise and a probe into its Singaporean associates Senjo Group, which owned the fintech firm in question, Finolita Unio, according to central bank board member Marius Jurgilas. He said a more efficient exchange of data between nations would have been beneficial.

“A better outcome isn't finger-pointing but sharing information ahead of time,” Jurgilas said this week in an interview. “Because by the time you implement your supervisory action, the crooks have already moved the money to the other side of the world. And who's to blame for that?”

Lithuania, Europe's fastest-growing fintech hub, had largely avoided the financial storms that have engulfed Baltic neighbors Latvia and Estonia, which have closed down banks over money-laundering. But it took center stage this week as the Financial Times said Finolita was used to funnel money out of Wirecard, partly to the German group's now fugitive second-in-command, Jan Marsalek.

Wirecard collapsed last June after saying that 1.9 billion euros in cash listed on its accounts probably never existed, sparking probes and a parliamentary inquiry into one of the country's biggest-ever corporate scandals. German legislators have since said Lithuania was slow to take action over the embezzlement.

Read more: How German Fintech Darling Wirecard Fell From Grace

With its fintech credibility on the line, Jurgilas stressed that rapid processing of licenses doesn't mean all are approved, pointing to more than 100 applications rejected in 2020 and 18 permits revoked in the past three years. Wirecard considered seeking a Lithuanian banking license but opted not to after talks with the central bank, he said.

Once the Wirecard scandal broke, Jurgilas said the bank worked with Finolita to strip Senjo of majority control and opened an investigation whose results are due in the coming weeks.

‘Sophisticated Schemes'

Finolita also says a lack of information on Wirecard's dealings hampered its own anti-money-laundering systems and risk assessment.

“You can't make informed decisions when you don't get information,” Chief Executive Officer Danas Oliskevicius said.

Finolita has been in close communication with Lithuania's central bank since the story broke and approached it itself in July to raise questions about its owners, according to Oliskevicius. Once the bank's probe is complete, the company will be sold to a pre-vetted buyer, he said.

“The Wirecard scandal will go down in history, its company structures will go into AML textbooks,” Oliskevicus said. “These were very sophisticated schemes. I'm sure this is why it happened to us.”

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