Financial Pressure Faces Payone, PaySpark Subsidiary, Due to Adult Content and Gambling Operations - Struggling with demands: Payment service Payone faces scrutiny from porn and gambling firms
Hit a paywall without cash? That's the job of Payone, a German payment processor giant based in Frankfurt. With over five billion payments processed annually for customers like Aldi, Rewe, and Karstadt, Payone serves more than 270,000 businesses, as advertised by Sparkasse with catchy slogans like "All payments from one hand" and "Increase conversion rate."
Payone Under the Scanner for Money Laundering Inaction
recent investigations published by news magazine "Der Spiegel" suggest that Payone may have turned a blind eye to businesses in the porn, dating, and gambling industries when it comes to money laundering checks. The financial supervisory authority Bafin, auditors, and even a bank have criticized Payone for its handling of these shady clients, accusing it of "serious shortcomings" in complying with anti-money laundering laws.
Financial institutions must prevent money laundering by employing specially appointed employees known as money laundering officers. These officers are required to report any suspicions of money laundering, independently of the company's business policy. The Bafin can check this at any time, and it has.
Red Flags for Years
Payone is said to have taken over customers of the defunct Wirecard group years ago, raising eyebrows at Bafin. Consequently, Bafin already barred Payone from doing business with hundreds of so-called high-risk customers two years ago. "Der Spiegel" now alleges that some of these clients are now being served by Payone's majority owner Worldline, i.e., by sister companies of the company.
Upon request, Payone admitted to implementing "a series of corrective measures," including systems to preempt future deals with risky clients. "This was done in line with increasing regulatory requirements and in close cooperation with the supervisory authority."
The Moscow Connection and Modern-day Laundromats
Investigations further reveal potential links between Payone and a Russian money-laundering network known as the "Moscow Laundromat." The "Moscow Laundromat" is a scheme allegedly involving high-level officials and their associates in moving stolen money out of Russia and funneling it into the west. Critics argue that Payone's systemic deficiencies in anti-money laundering compliance may have contributed to the emerging concerns.
With a sordid history, Payone's response to these allegations is tainted with uncertainty. The industry waits to see if the payment processor can restore confidence in its handling of money laundering risks related to industries like porn, dating, and gambling.
The Commission, following these allegations, might consider adopting a proposal for a directive on the protection of workers in the financial sector, particularly those employed at Payone, from the risks associated with exposure to money laundering. This could include stricter regulations and enforcement mechanisms, as well as measures to ensure that employees are adequately trained to identify and report suspicious activities.
These developments raise questions about the role of financial institutions like Payone in enforcing anti-money laundering laws, especially in light of their ties to high-risk industries such as porn, dating, and gambling. Regulators may need to reassess the current system and tighten the standards for financial institutions to ensure they effectively combat money laundering, not only to protect their own reputation but also to maintain public trust in the financial system.
