Syedur Rahman Of Financial Crime Specialists Rahman Ravelli Assesses Developments.

Prosecutors in Germany are now looking into how the country's financial supervisory authority conducted itself in the run-up to Wirecard's bankruptcy.

Events prior to the payment company's demise have prompted prosecutors and federal police to submit a written request for information from Germany's Federal Financial Supervisory Authority (BaFin). The Frankfurt Public Prosecutor's Office has reportedly received a number of requests for charges to be brought against some individual BaFin staff.

BaFin is to be reformed as a result of criticism it has received for how it managed the Wirecard collapse. The authority has been accused of ignoring warnings of fraud and other misconduct at the company.

In June last year, Wirecard announced that €1.9 billion supposedly missing from its accounts probably did not exist. It then filed for bankruptcy.

Wirecard's collapse triggered an earthquake in Germany's financial markets. The German government now faces the task of reviving the country's accounting supervision and its financial oversight.

The investigation is certain to evaluate the inner workings of BaFin, with the authority handing over all relevant documents and key individuals being interviewed.

While it is as yet unclear which individuals are to be investigated, the head of Germany's accounting watchdog is to step down following political pressure. Felix Hufeld, the president of BaFin, and his deputy Elisabeth Roegele have also been under pressure for not being quick enough to identify warning signs regarding Wirecard. It remains to be seen exactly how this will be handled, but an independent inquiry would appear to be the logical course of action.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.