UPDATE: Luxembourg’s Regulator Fines Unzer, Following Bafin Action

September 28, 2022
Luxembourg’s financial regulator has fined the payments firm Unzer for failing to comply with anti-money laundering (AML) regulations in the country.

Luxembourg’s financial regulator has fined the payments firm Unzer for failing to comply with anti-money laundering (AML) regulations in the country.

The Commission de Surveillance du Secteur Financier (CSSF) has taken action against German payments firm Unzer, fining it a total of €145,000.

On-site inspections that were carried out by the CSSF in 2020 and 2021 uncovered shortcomings in several areas, including name matching processes, risk assessments and internal control arrangements.

The fine against Unzer, which is active in eight EU member states, was issued last month, with details only just released.

According to the regulator, the penalty reflected both the “number and degree of severity of the breaches”, but also the fact that the company has since taken measures to address the findings.

A spokesperson for Unzer told the local press that the company has “already come a long way”.

In addition, the spokesperson added that it has now parted ways with a small number of clients who had been identified as non-compliant with the company’s requirements.

Unzer’s website suggests it is one of Europe’s leading payments companies. In 2021, it processed more than 164m transactions, and served more than 70,000 merchants.

However, its failure to comply with AML rules has been a thorn in its side. As reported by VIXIO earlier this month, the company has already been placed under special measures by Germany’s financial watchdog Bafin.

Original story: BaFin Takes Action Against Another Fintech (September 2, 2022)

Following its restrictions on N26 last year, payment gateway Unzer has been prevented from onboarding new clients by Germany’s financial watchdog.

It has been revealed that the German Federal Financial Supervisory Authority (BaFin) has informed Unzer, a payments institution in Germany, that it must comply with anti-money laundering provisions.

BaFin has also placed a customer ban on the company, meaning that it cannot take on any new customers, while still being able to continue operating with its current customer base.

In addition, the supervisory authority said that it has appointed a special officer to monitor the implementation of the measures ordered.

Appointed in late August, the special representative will report continuously to BaFin on the status of implementation.

A special audit commissioned by BaFin revealed a large number of deficiencies, some of which were serious, in the areas of appropriate corporate management measures, control mechanisms and processes, according to the regulator.

In addition, serious deficiencies were identified in connection with money laundering laws.

The most serious shortcomings related to a special payment service structure with several hundred merchants, whereby most of the merchants in question were revealed to be front companies.

The transaction monitoring for this business was incomplete or non-existent, and while operating between 2018 and 2021, BaFin found the business to be “unusually profitable”, resulting in a very high risk of criminal activity.

Reacting to BaFin, Unzer said that it has cooperated with BaFin and will continue to do so. “Building on the measures already established since mid-2020, Unzer will implement the remaining requirements imposed on the company swiftly and expeditiously.”

"The conclusion of the special audit is an important milestone for us to continue improving our own compliance systems and processes,” said Robert Bueninck, the company’s chief executive.

Bueninck, who previously headed up buy now, pay later firm Klarna in the DACH region, said that further improvements to compliance systems and processes remain a high priority. “A culture of full compliance with regulatory standards is a prerequisite for sustainable success in the market."

BaFin took similar action against fintech N26 in autumn of last year, when the company was to substantially reduce the level of customer acquisition permitted each month to a maximum of 50,000 new customers.

It was also fined €4.25m for anti-money laundering failures. The fine was imposed because of the delayed submission of suspicious activity reports in 2019 and 2020.

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