N26 will continue to be limited in terms of growth by the requirements of the banking supervisory authority Bafin. According to an order by the Bafin, which was announced in Frankfurt on Monday, the Berlin start-up can only accept a maximum of 50,000 new customers per month.
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Despite some progress, N26 still have deficiencies in the prevention of money laundering and terrorist financing, explained the Bafin on Monday. The suspicious activity reporting system is particularly affected. The institute must “create adequate IT monitoring, set up an appropriate quality assurance function and set up effective controls for outsourcing,” says Bafin.
Special Representative’s mandate extended
Therefore, the mandate of a special representative who is to monitor the implementation of anti-money laundering measures at the Berlin start-up has also been extended. If the Special Representative finds that N26 is making reasonable progress in addressing the deficiencies, the new customer growth cap could be relaxed.
For some time now, the Bafin has been taking action against neo-banks such as N26, C24 and Solarisbank as well as online brokers such as Flatexdegiro. In the case of N26, Bafin believes that the company has grown too quickly and has not evolved its processes and controls accordingly.
In 2021, Bafin accused the German start-up of not doing enough to combat money laundering given its rapid growth. At that time, the supervisory authority also imposed a fine of 4.25 million euros because N26 had submitted suspicious money laundering reports late.
In May 2021, Bafin appointed the special representative, and then in November restricted the neobank’s acceptance of new customers. N26 said it had “completely complied” with the 2021 business organization and risk management order.
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“In recent years, N26 has invested extensively in preventive measures in the field of money laundering and has increased its staff and optimized it technologically,” the company announced. The latest order recognizes “these significant advances” and includes a plan to clarify outstanding issues.
According to its own information, N26 has more than eight million customers in 24 countries and an annual transaction volume of over 100 billion euros. More than 1500 employees currently work at N26.
(vbr)
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