Friday 20 August 2021
fight money laundering
Baffin tears his patience with N26
In Bafin’s view, Neobank N26 does not act decisively enough against money laundering and counterfeit stores. Therefore, bank supervisors are considering preventing fintech from accepting new clients. This will not only affect the current funding round.
The issue between Neobank N26 and financial supervisory authority Bafin does not appear to be over. According to “Handelsblatt” information, the authority is considering restricting the work of new customers of the Berlin startup. So Bafin is troubled by the fact that deficiencies in the organization and in the fight against money laundering and other illegal transactions are only slowly being addressed. The newspaper quoted sources “familiar with the matter” as saying: “the patience of bank supervisors has been ruptured.”
It is relatively easy to open an account with N26 without revealing too much about yourself. So the company struggles with money laundering and counterfeit stores. Bafin issued a warning to N26 for the first time in 2019. However, the measures taken so far against this have not been enough for Bafin. The Handelsblatt newspaper recently published a list of about 1,600 accounts allegedly used illegally.
Banning accepting new clients will not only damage the company’s reputation but may also jeopardize international expansion. This action will come at the wrong time for a growing fintech, as it is in the middle of a major funding round. N26 has grown rapidly in recent years and now has 1,500 employees and seven million customers. After the last round of funding a year ago, N26 was valued at $3.6 billion, making it one of the most valuable German startups.
Neither N26 nor Bafin wanted to confirm the reports. However, under increasing pressure from the authorities, the smartphone bank is moving AML to the top management floor in the future. For this purpose, a member of the risk board will be appointed at the level of the entire group of companies, the startup explained. In addition to his previous duties, the position will be taken over by the Managing Director of N26 Bank, Thomas Gross. According to N26, Gross came to the Berlin company in 2019 and previously worked at Deutsche Bank, among others. Grosse is supported by an anti-money laundering representative.
“Expanding our management structures in the areas of governance, compliance, risk management and anti-money laundering is an important step on our growth path towards a global digital bank,” said company founder Valentin Stalf. We are aware of our own responsibility as a leader in the digital field and therefore maintain an open and constructive relationship with the supervisory authorities.