With its rapid growth, the smartphone bank has done too little to combat fraud and abuse. The banking supervisory authority is now presenting the Berlin start-up with an expensive receipt.
The smartphone bank N26 has to pay a fine of millions to the financial supervisory authority Bafin for inadequately combating money laundering. The supervisory authority announced on Wednesday.
The Berlin start-up was accused of not having resolved enough to investigate suspected cases. In doing so, the bank violated the law on tracing profits from serious crimes. In May, the Bafin had already appointed a special representative to keep N26 on the finger.
N26 admitted that in 2019 and 2020 “fewer than 50 reports of suspected money laundering” were submitted to the Bafin late. The fine of 4.25 million euros was paid on time in June, the bank said. According to the Bafin, the fine has been legally binding since July 15.
The amount of the fine for N26 is exceptionally high. Last year, Bafin set fines totaling almost 8.5 million euros across all business areas, including a total of almost 400,000 euros for the areas of banking supervision, money laundering prevention and insurance supervision combined.
The next round of financing is already in sight
With the conclusion of the fine proceedings, N26 has cleared a potential stumbling block for the next round of financing. In addition to the fine, according to media reports, the Bafin even considered imposing restrictions on new business against N26. These far-reaching sanctions are now probably off the table. According to information from financial circles, the company wants to raise several hundred million dollars for further expansion.
The company emphasized that it had already “fully implemented” all the measures required by the Bafin to improve timely reports of suspicious activities. N26 takes its responsibility in the fight against the global increase in financial crime and in the prevention of money laundering very seriously. “In the past few months in particular, we have taken numerous far-reaching measures and established structures and processes that meet the highest standards and at the same time set new standards in the industry.” This means that N26 will continue to be well positioned against criminal activities in the future – especially in connection with the steadily growing online trade.
Banking-App als Kernangebot
N26 is one of the so-called smartphone banks whose core offering is a banking app for mobile phones. These financial institutions are also known as “neobanks”. So far, N26 has won seven million customers. Investors involved in N26 include the German insurance group Allianz, the Singapore state fund GIC, the Chinese internet giant Tencent, Earlybird and the German-American investor Peter Thiel. According to expert estimates, a new round of financing could raise the start-up’s valuation to just under ten billion euros.
For further advancement, N26 has to fill an important position in top management because the previous head of Germany, Georg Hauer, is leaving the company. His new employer, the Munich start-up Hawk AI, specializes in the detection of money laundering attempts. This is the area that N26 had now registered the expensive complaint from the Bafin.
Like the two company founders Valentin Stalf and Maximilian Tayenthal, Hauer comes from Vienna. He was appointed head of Germany in 2019. Most recently, Hauer was responsible for the entire German-speaking region and Northern Europe. N26 said the search for a successor was “already advanced”.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
