Germany’s monetary regulator has ordered digital financial institution N26 to strengthen its controls in opposition to cash laundering and appointed a particular supervisor to watch certainly one of Europe’s most highly-valued fintechs.
BaFin’s resolution to nominate a particular supervisor is uncommon, the one different event being with Deutsche Financial institution in 2018. It has commissioned audit agency Mazars for the function, in response to folks accustomed to the matter.
The intervention from the regulator comes two years after it ordered the Berlin-based financial institution to strengthen its anti-money laundering practices after elevating quite a few issues.
N26, which was valued at $3.5bn in a funding spherical final 12 months, has been one of many fastest-growing challenger banks in Europe because it was based in 2013. It has raised near €800m from buyers together with Tencent, Allianz X and Peter Thiel. Earlier this 12 months, the financial institution, which has greater than 7m shoppers in 25 nations, stated it was working “in direction of a public itemizing sooner or later”.
Explaining its resolution, BaFin stated that N26 wanted to “rectify deficiencies each in IT monitoring and in buyer due diligence” and to “make sure that it has the satisfactory personnel, technical and organisational assets to adjust to its obligations beneath anti-money laundering regulation”.
In a press release, N26 stated it had already “massively superior” its cash laundering controls, however “nonetheless we acknowledge that extra must be accomplished in that space.”
Prison exercise tied to on-line procuring have “accelerated considerably” because the begin of the pandemic as extra accounts had been opened for fraudulent functions, it added.
The financial institution promised to enhance its transaction monitoring, launch extra security measures with regard to verifying the id of shoppers, and to bolster the assets dedicated to anti-money laundering.
Three months after the BaFin’s first intervention in Might 2019, N26’s co-chief government Valentin Stalf instructed the FT that the problems on the financial institution had been by no means as grave as prompt within the media, and had been largely mounted.
“We now have a full banking license and we adjust to each regulation there’s,” he stated again then. “There have been some issues that BaFin criticised that we tackled instantly, and others that we had been engaged on already.”
BaFin instructed the FT in a press release on Wednesday that it has determined to take extra regulatory steps in an effort to battle “ongoing deficiencies with regard to the prevention of cash laundering”, including that these deficiencies continued regardless of its shut scrutiny.
N26 has been given a deadline to repair the shortcomings, BaFin stated. “The particular supervisor might be our prolonged arm on the lender,” the regulator stated.
Mazars didn’t instantly reply to a request for remark.