German Federal Financial Supervisory Authority (BaFin) has ordered challenger bank N26 to improve its prevention of money laundering and terrorist financing.
This order against N26 will require the bank to improve internal safety measures and comply with general customer due diligence obligations.
Specifically, N26 must remove backlogs in IT monitoring, establish process descriptions and workflows in writing, and reidentify a specified number of existing customers.
The measures must be implemented within a specified time period; however, what this timeframe is was not made clear by the regulator.
Moreover, N26 needs to guarantee it has adequate personnel and technical organisational equipment to meet money laundering law obligations.
It was reported earlier this year the regulator warned the German challenger bank with its response to fraud, following allegations it was unable to adjust measures in line with its rapid growth. Incidents of this included a customer claiming they had €80,000 stolen from their account, and many other customer complaints which did not receive a response from N26 for weeks, a report from Handelsblatt said.
Following the €200bn money laundering scandal at Danske Bank last year, a number of regulators across Europe have been bolstering AML and CTF implementations. BaFin is one of the authorities taking more action, having recently extending its mandate on Deutsche Bank, which supposedly acted as a correspondent bank for Danske Bank Estonia and helped transfer funds.
Its mandate required the bank to review its group-wide risk management processes surrounding banking and make necessary adjustments.
Measures taken by other geographies include Denmark’s government looking to separate close ties between regulators and banks, and the EU giving new AML powers to the European Banking Authority.
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