BaFin Orders Neobank N26 to Strengthen AML Measures

German financial market regulator, BaFin has gone after the local neobanking giant, N26 and issued an order to strengthen controls and safeguards over preventing money laundering and terror financing using the platform.

Announced on Wednesday, the regulator appointed a ‘special commissioner’, who will be responsible to monitor the implementation of the order. Though the order stressed that the digital bank should comply with the general due diligence requirements, it did not specify any violation on the part of the company.

However, N26 detailed that fraudsters were misusing the platform by pushing third parties to open accounts, which were used for fraudulent purposes. “Since the start of the COVID pandemic, criminal activity in connection with online trade has increased strongly around the world,” the neobank said.

“The demands of BaFin aim among other things to prevent the opening of such accounts, to identify illegal financial transactions as quickly as possible, and to block them.”

In addition, the company revealed that it is closely working with the regulator to improve its systems and implement the orders.

Many Deficiencies Have to Be Fixed

BaFin’s public order wants N26 to rectify deficiencies both in IT monitoring and in customer due diligence. Additionally, the digital bank has to ensure that it has adequate personnel, technical and organizational resources to comply with its mandatory Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term towards preventing financial crimes.

BaFin further added that the orders must be implemented within a specific timeframe, without disclosing it to the public.

The German regulator’s interest in the digital bank is seen by many as its strengthening grip on the Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term market following the collapse of Wirecard. Furthermore, a similar regulatory order was issued to German lender Deutsche Bank last month.