N26 fined €9.2 million in Germany for money laundering concerns

Germany’s financial regulator, BaFin, has imposed a fine of €9.2 million ($10.00 million) on the online bank N26 for systematic delays in filing reports of suspected money laundering in 2022, the regulator announced on Tuesday.

Credit institutions are required to submit reports to the Financial Intelligence Unit (FIU) if they suspect that a transaction could be related to money laundering or terrorist financing. These reports must be submitted promptly to enable authorities to take action if necessary, BaFin said in a statement.

The bank said in a statement that it had already addressed the problems behind the BaFin fine. N26 also stated that it invested more than €80 million to meet “the highest standards” in combating financial crime and is fully committed to complying with all aspects of BaFin’s order. This came despite downsizing its workforce by cutting 71 jobs, roughly four percent of its headcount, due to a challenging macro-economic business climate.

Earlier in 2023, BaFin extended money laundering controls at challenger bank N26, which is one of Europe’s most highly valued fintechs, due to the ongoing “deficiencies” in its systems.

BaFin fined the business €4.25 million in 2021 for its lax money laundering controls and placed a temporary limit on the number of new customers the bank could onboard each month, capping it at 50,000 new customers. In a rare move, the regulator also appointed a special supervisor to monitor the digital lender.

BaFin urged N26 twice since 2019 to “rectify deficiencies both in IT monitoring and in customer due diligence” and to “ensure that it has the adequate personnel, technical and organisational resources to comply with its obligations under anti-money laundering law”.

N26 revealed plans earlier this year to expand its crypto trading service gradually across Europe. Customers need to complete identity verification and eligibility checks before they can access cryptocurrency trading in the app’s ‘finances’ tab.

The challenger bank, which has more than €6 billion of deposits in customer accounts, also plans to roll out the feature to users in other European markets. It will eventually expand its token offering to almost 200 cryptocurrencies.

Behind the scenes, N26’s crypto offering is backed by Bitpanda which handles trading and custody for digital assets.