Suspicious activity: German regulator extends order against N26 Bank

 

By Christoph Dernbach, dpa

 

BERLIN- German online banking start-up N26 will continue to face limits on the number of new customers it can accept each month under an updated order from German bank regulator BaFin.

BaFin announced the restrictions on N26 on
Monday in Frankfurt.

BaFin has accused N26 of not doing enough to prevent people from using the bank to launder money or finance terrorism.

The Berlin-based N26 will only be able to accept 50,000 new customers each month under the order.

BaFin also extended the mandate of a special representative who is monitoring the implementation of anti-money laundering measures at N26.

The German regulator has increasingly taken action against so-called online “neo-banks” such as N26, C24 and Solarisbank as well as online brokers such as flatexDEGIRO.

In 2021, BaFin accused N26 of doing too little to combat money laundering during its rapid growth, arguing it had added too many customers too quickly and not done enough to develop proper internal controls.

The regulator also imposed a fine of €4.25 million ($4.77 million) because N26 was late in filing suspicious activity reports.

N26 said it had “fulfilled” BaFin’s order on business organization and risk management and would continue working with the regulator to implement anti-money laundering measures.

“Over the past years, N26 has made significant investments in anti-money laundering measures, and continues to further expand these efforts around its technological and organizational capacities,” the bank said on Monday.

It said BaFin’s latest order “recognizes these improvements” and includes a plan to address outstanding issues.

“N26 will continue to work in close coordination with BaFin and the special commissioner to fully implement the updated order with the appropriate measures.”

N26 said it has more than 8 million customers in 24 countries and an annual transaction volume of more than €100 billion. N26 currently employs more than 1,500