German Banks accused of Illegal Online Gambling Payments

German media source exposes allegations of illegal online gambling payments facilitated by four local banks, including popular casino web wallet Wirecard.

German Banks and Casino Web Wallet AccusedOn Wednesday, German newspaper Süddeutsche Zeitung and radio broadcasting firm NDR made brow-raising accusations against a number of German financial institutions. The media agency alleges that DZ Bank, Hypovereinsbank, Postbank, and Wirecard Bank are guilty of processing illegal online gambling payments.

According to their investigation, revolving around the previously leaked ‘Paradise Papers‘, there’s a history of financial subterfuge. They’ve accused these banks of processing payments for what national law deems to be illegal online casinos.

The evidence comes from the Paradise Papers scandal. It involves approximately 13.4 million documents leaked from a law firm an trust company in Singapore. The documents deal with a wide range of financial activity, exposing the offshore bank accounts. They include major corporations like Apple and Nike, as well as the world’s most rich and famous; even Queen Elizabeth II.

Banks and Casino Web Wallet Accused

The newspaper said that, deep within those documents lies evidence that these German banks are guilty of money laundering. Online gambling is illegal in the country, and German law prohibits “participation in payments in the context of unlawful gambling”.

The Paradise Papers reveal that these and other unnamed German financial institutions made it possible for Germans to transfer funds into illegal, internationally operated online casino accounts.

According to Süddeutsche Zeitung, the interior ministry of the German state of Lower Saxony said that the banks activities and evident cooperation with financial service providers could warrant legal charges in relation to assisting in illegal gambling and money laundering.

The interior ministry is investigating the matter more thoroughly.

Parties Claim No Wrong Doing

Hypovereinsbank and Postbank responded briefly to calls for comment on the allegations made Wednesday. Both claimed no wrong doing. They said their agencies are in compliance with all German legal and regulatory guidelines.

Some analysts are pointing the finger at the nation’s financial authority, BaFin, for failure to properly monitor the situation. BaFin is responsible for ensuring the integrity and legal compliance of German banks and financial lenders.

The regulator defended its actions (or lack thereof) on Wednesday. “We at Bafin are not in a position to determine whether a gambling provider is operating illegally on the market”.

DZ Bank and Wirecard have yet to respond.

Wirecard Has Faced This Music Before

This isn’t the first time the popular web wallet service is facing allegations of  processing illegal online gambling payments. Last February, a scathing report surfaced from Zattara Research. It accused the bank of money laundering and processing illegal gambling payments, dating back to 2010.

The report caused a significant drop in Wirecard’s share prices. But was that Zattara’s intention all along? Reuters unearthed a trail of duplicitous market share undermining on he 2016 whistle-blower’s part.

The Feb. 2016 report from Zattara Research was filled with allegations against Wirecard, (all of which the payment company vehemently denied), and—according to Reuters—actually included a statement that confirmed Zattara “aims to profit from a fall in the stock”.

The following month, Wirecard Bank—which provides a prepaid virtual MasterCard known as Wirecard, an online account service available for use at more than 20,000 merchant websites—responded to those allegations. The company issued a statement that included the following information regarding payments for online gambling services.

“Online gambling transactions solely originate from regulated online gambling operators and volumes constitute about 7% of Wirecard’s total transaction volumes. They are aggregated under the ‘digital goods’ segment of Wirecard’s public reporting. Any claim that Wirecard obfuscates payment jurisdiction and associated merchant risk, to circumvent high risk categorization and authentication requirements within the credit card organisation networks, is wrong. Wirecard’s compliance and merchant account setup procedures are repeatedly audited by regulatory bodies as well as the credit card organisations themselves. The allocation of country and merchant category codes to individual merchant accounts is conducted fully in accordance with all regulatory, tax and credit card organisation rules.”

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