Topic Unauthorised business IMS International Marketing Services GmbH: account freezing and winding-down of unauthorised money remittance business
On 17 and 20 February 2017, the German Federal Financial Services Supervisory Authority BaFin imposed an account freeze on the known to still be active bank accounts which IMS International Marketing Services GmbH, a German limited liability company based in the city of Greven, held in Germany. The administrative action is by law immediately enforceable; it is based on § 4 (1) sentence 4 of the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG).
In its decree of 5 April 2017, BaFin ordered IMS International Marketing Services GmbH to immediately cease and wind down its unauthorized money remittance business with investors in “OneCoin” for Onecoin Ltd, Dubai; that decree is based on § 4 (1) sentence 1 ZAG. In case IMS should not abide by the order to cease business, BaFin threatened to impose a coercive fine of 1.5 million euros; for non-compliance with the winding-down order, it would impose a coercive fine of 150,000 euros. By law, the administrative acts, including the threats of coercive fines, are immediately enforceable.
BaFin ordered IMS International Marketing Services GmbH to transfer the remaining bank deposits back to the investors who had made payments to IMS International Marketing Services GmbH most recently, where the bank deposits are not subject to a garnishment.
Onecoin Ltd, Dubai is part of a network of companies that market virtual units, which they declare to be a cryptocurrency, under the "OneCoin" brand using a multi-level marketing structure both globally and in Germany. On behalf of Onecoin Ltd, IMS International Marketing Services GmbH had investors who had bidden to buy "OneCoins" transfer the sales price to various accounts held by IMS International Marketing Services GmbH with different banks in Germany and forwarded the money on behalf of Onecoin Ltd to third parties, based in particular outside of Germany. This kind of financial service is classified as money remittance business as defined in § 1 (2) no. 6 ZAG, which, as a payment service, requires prior authorization by BaFin in accordance with § 8 (1) sentence 1 ZAG. IMS International Marketing Services GmbH did not and does not have the required authorization.
Between December 2015 and December 2016, IMS International Marketing Services GmbH took in, in total, approximately 360 million euros on behalf of Onecoin Ltd. Approximately 29 million euros of this remains in the currently frozen accounts.
BaFin does not have the right to decide as to the validity under civil law of the “OneCoins” sales contracts. It may therefore not answer questions of this nature.
The orders may still be subject to judicial review.