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N26 under scrutiny as German regulator extends measures to prevent money laundering

According to BaFin, despite improvements the bank still has “deficiencies in its systems”.



Germany’s financial regulator BaFin has reportedly extended measures over N26 to prevent money laundering, doubling down on constraints put on the neobank two years ago.

Since 2021, there have been limits placed on N26, which came alongside instructions to comply with due diligence to prevent money laundering and terrorist financing.

Now the German watchdog is extending these restrictions, including a special monitor at the bank and a limitation of 50,000 new customers per month, according to Reuters.

BaFin noted that despite “some progress”, the bank still has “deficiencies in its systems”.

The bank said it has made “significant investments” in its anti-money laundering measures and is “committed to complying with all aspects of the order as quickly as possible”.

The German regulator is also reportedly requiring N26 to instance adequate IT monitoring as well as improved quality assurance and effective outsourcing controls.

Back in 2021, BaFin appointed a special representative to monitor the bank’s progress and ensure it acted on the identified issues, highlighting a lack of proper systems and adequate staff to comply with regulations.

This built on restrictions put in place by the regulator two years prior to that, in 2019, when it was investigated for reported fraudulent transactions and issues with staff.

Amidst regulatory issues, the bank has experienced a shake-up in its core C-suite staff this year, losing its longest-serving team member after its founders, chief growth officer Alexander Weber most recently.

It also saw the departure of its CFO Jan Kemper, who was replaced by Arnd Schwierholz, as well as its chief risk officer Thomas Grosse amid a restructuring of the company that saw it cut 4 per cent of its headcount.

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