BaFin Fines N26 € 9.2 Million For 2022 Compliance Vulnerabilities

Germany’s financial regulator has fined 9.2 million euros ($10.00 million) on the German online bank N26 as it found that in 2022, the bank had consistently filed reports of suspected money laundering late, said BaFin on Tuesday.

Since credit institutions are obliged to report to the Financial Intelligence Unit if they have doubts that a particular transaction might be linked to money laundering and financing of terrorism, the regulator discovered that N26 failed to forward its reports within the stipulated time.

German regulator BaFin penalized N26 for failing to adhere to anti-money laundering rules, therefore, it is on the brink of relaxed restrictions on the number of new customers the digital bank can onboard.

BaFin also fined the bank €4. 25 in the year 2021 for the same violation and then set a limit on the number of new customers this lender could take every month for a temporary period. The limit to adding 50, 000 new clients per month remains in force and is complemented by an audit trail at the bank to check on its implementation.

In the prior year, the regulator extended the cap in July, stating that there were still some shortcomings in the N26’s systems and the necessity of better IT monitoring, increased quality assurance, and proper outsourcing management.

According to media reports, the regulator is now considering the removal of the limit as soon as this year.

N26 Investment In Compliance Measures

In a statement, N26 stated that since 2022 it has adopted “a range of measures to strengthen the reporting arrangements, and has spent more than €80 million in staff and technologies to ensure the highest level of protection against financial crime and money laundering”.

As a result of these limitations, N26 has endeavored to make improvements to its reporting mechanisms since the year 2022. It has also committed over 80 million EUR of its resources both in human and technical resources to meet and maintain high industry standards in the fight against financial crime and money laundering.

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According to N26, the company expected a fine and made related provisions in its 2022 annual financial statement. The fine that has been imposed does not correspond with the budget amount set aside for that purpose. The bank has also reassured that it will maintain its cooperation and reliance on regulations regarding these issues.

N26 Introduces Joint Accounts Across Europe

Meanwhile, N26, an online banking platform, has also launched a joint account service in 21 countries of the European Union, including Austria, Belgium, Spain, and Sweden. It facilitates finance management with or without paperwork by using your mobile application.

Responding to the widespread media reports, the bank stated in a published article that it has provided more than sufficient provision for the fine, says media sources.

“N26 retains its strong and confident cooperation with the supervisory authorities,” it said.