German Regulator Fines N26 €9.2m For Money Laundering Prevention Lapses

May 21, 2024
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German challenger bank N26 has been fined for failing to comply with financial crime rules, marking its fifth sanction from the country’s financial regulator.

German challenger bank N26 has been fined for failing to comply with financial crime rules, marking its fifth sanction from the country’s financial regulator. 

The German Federal Financial Supervisory Authority (BaFin) fined N26 on April 24 under the country’s money laundering laws, it revealed this week. BaFin had discovered that the bank was late to file reports of suspected money laundering in 2022.

In a press statement on its website, N26 says that from 2022 onwards, it “implemented numerous measures to further improve reporting processes, while investing over €80 million in personnel and technical infrastructure to maintain the highest industry standards in combating financial crime and money laundering”.

“The company already set aside provisions for a potential fine in its 2022 annual financial statements, and the current fine is less than the provision set aside,” the statement said. “N26 will continue its close and trusted collaboration with its regulators on all related topics.”

The bank has previously faced scrutiny for assorted breaches and deficiencies in anti-money laundering (AML) protocols by German authorities.

In 2021, BaFin designated a special monitor to supervise the enforcement of adequate AML procedures at N26, signalling concerns regarding the bank's compliance practices.

In June 2021, N26 was fined €4.25m for delays in submitting suspicious activity reports between 2019 and 2021. 

Also in 2022, Banca d’Italia, the Italian central bank, imposed restrictions on N26’s Italian branch. These included banning the bank from engaging in transactions with new customers or offering new products and services to existing customers.

N26's history of compliance failures has dimmed its once-promising outlook, despite its initial acclaim as a European fintech pioneer after it became the first fully online bank licensed in Germany.

According to its website, it serves 8m customers.

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