20200701 Wirecard : the FCA’s freezing of assets.

The FCA did not say who had issued that notice. Was it Loot’s administrators? Was it Wirecard?
Importantly, the FCA did not say who had control of the money of the customers of Loot. Was it Loot’s administrators? Was it Wirecard? Hence the emphasis we placed in the FCA notice.

Despite this case, it appears that this part of the FinTech sector was not given the reconsideration that it deserves.

In various jurisdictions where Wirecard was operating, there had been rumblings of problems since early 2019 but there was nothing specific and certainly nothing that anyone (except as we now know its auditors) could take to prosecutors or regulators.

But there was something systemically flawed in the regulatory regimes of the providers of such services.

Moreover, it still is.

The first thing is that the FinTech revolution has put services historically provided by highly regulated bankers into the hands of technologists and salesmen.

They have no history in financial sector risk and often rely on computerised models they have, themselves, developed.

Indeed, to start with, regulators turned a blind eye – first they called it ″a sandbox″ and, then, ″light touch regulation″ – to questions of compliance and, even, financial crime risk, including money laundering risk systems.

As regulators have, at last, arguably a decade too late, come around to imposing those requirements on those providing similar services, many, many have shut up shop or moved to less regulated jurisdictions.