BaFin Appoints Supervisor To Monitor N26’s AML Controls

Germany’s main financial regulator, the Federal Financial Supervisory Authority (BaFin), has ordered German neobank N26 to increase its anti-money laundering (AML) efforts, according to an announcement.

“BaFin ordered N26 Bank GmbH to rectify deficiencies both in IT monitoring and in customer due diligence,” BaFin said in the announcement.

The regulator is taking the action “to implement appropriate internal controls and safeguards and comply with general due diligence requirements,” the announcement stated. “…In addition, N26 Bank GmbH is required to ensure that it has the adequate personnel, technical and organizational resources to comply with its obligations under anti-money laundering law.”

BaFin is appointing a “special commissioner” who will regularly update BaFin on the bank’s compliance, according to the announcement.

The Financial Times (FT) reported that it is “rare” for German authorities to appoint a special commissioner to monitor a bank, having done so only once previously — with Deutsche Bank in 2018.

FT reported that N26 said in a statement that it has “massively advanced” its AML systems, but it “acknowledge[s] that more needs to be done in that area.”

N26 was founded in 2013 by Valentin Stalf and Maximilian Tayenthal and launched its first product in 2015, according to the bank’s website. The bank has 7 million customers in 25 markets. The bank puts its employee headcount at “over 1,500” at offices in Berlin, New York, Barcelona, Vienna and Sao Paulo.

In March of this year, N26 announced in a press release that it had hired Gilles BianRosa as chief product officer. BianRosa previously held similar roles at SoundCloud and Samsung Electronics.

As of May 2020, N26 said in a separate press release that it had retained its $3.5 billion valuation after an extension of its Series D funding round to $570 million and a further increase of over $100 million from all of the company’s major investors.

At the time, N26 said in the release that it would use the money “to accelerate N26’s product development and strengthen its footprint in its core markets, where the demand for mobile banking is higher than ever before.”