The Wirecard Case Promotes the Compliance also in China

The Wirecard affair is also making waves in China. The now insolvent company was to be the first German payment service provider to enter the Chinese market. In addition to the Chinese company Allscore Payment Services, which was taken over in November 2019, Wirecard also cooperated with Chinese giants such as Alipay, WeChat Pay and Ctrip.com. In the meantime, the case has been reported in many important Chinese media, including Sohu and Sina.

It is worth mentioning that the AllScore Payment Service company acquired by Wirecard was entered on the blacklist of the Chinese Corporate Social Credit System (CSCS) in June of this year due to the failure to comply with court rulings. The People’s Bank of China (PBOC) had already imposed a fine of 65.9 million renminbi (8.5 million euros) on AllScore Payment Service in May 2020 for allowing Allscore to make payments from Chinese citizens to online gaming sites outside China. It stands to reason that China will now further strengthen the monitoring of foreign companies through the social credit system. If they want to avoid new risks, German companies in China must firstly establish or strengthen an internal compliance system. Secondly, they must ensure that their business partners in China operate in accordance with the rules and do not violate the law.

We also recommend that independent external observers be deployed in China to monitor business activities where there are indications of misconduct by companies and individuals. These observers act as independent consultants, compliance experts and appraisers. Their task is also to review, assess, correct and monitor the specific control mechanisms of the company in order to prevent any further misconduct.

Picture: https://www.flickr.com/photos/websummit/49054670061

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