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German watchdog defends itself over Wirecard scandal

 

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Remarks: Felix Hufeld, president of BaFin, has defended the financial watchdog. Photo: Bernd Roselieb

Remarks: Felix Hufeld, president of BaFin, has defended the financial watchdog. Photo: Bernd Roselieb

Remarks: Felix Hufeld, president of BaFin, has defended the financial watchdog. Photo: Bernd Roselieb

The head of Germany's financial watchdog has defended the agency amid growing criticism over Wirecard's collapse.

BaFin is doing exactly what German lawmakers asked, with a mandate that only allowed it to supervise small parts of the payments company, according to Felix Hufeld, the agency's president.

It is up to lawmakers to improve the regulation of tech firms, where there are lots of grey areas, he said.

Mr Hufeld's comments come as questions mount over how Wirecard, which straddled banking and technology, survived so long before disclosing last month that €1.9bn was missing from its balance sheet. The company filed for insolvency and many top executives have been arrested.

Wirecard escaped strict scrutiny for years as BaFin focused solely on its banking unit.

The Government is now overhauling who regulates who, potentially ushering in a regulatory rethink with consequences for the broader fintech industry.

The demands of some lawmakers to refashion BaFin along the lines of the US Securities and Exchange Commission (SEC) isn't sufficient, Mr Hufeld said.

"We can learn from the SEC model, but there are cases of fraud there, too," he said. "The US also has a different system of justice that's not easily transferred into Europe."

Bloomberg

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