German financial watchdog BaFin blasted online bank N26 for weak anti-money laundering (AML) controls and imposed a 4.25 million euro ($4.93 million) fine on the digital banking platform, according to a report in the Financial Times on Wednesday (Sept. 29).
BaFin ordered N26 to beef up its AML protocols twice since 2019 and in May took the unusual step of assigning a special supervisor to monitor the bank.
N26 paid the almost $5 million penalty in July. The company said in a statement that it related to the late filing of almost 50 suspicious activity reports in 2019 and 2020.
Germany’s largest online bank, ING Germany, was criticized in court by a BaFin representative on Tuesday (Sept. 28) for its slow response to suspicious trades by a client, who later admitted to sweeping insider trading.
N26 was valued at $3.5 billion in a 2020 fundraising round and said earlier this year it was working on going public, according to the FT report.
The company has raised close to 800 million euros (more than $927 million) from investors including Tencent, Allianz X and Peter Thiel. It says it has more than 7 million clients in 25 countries.
“All measures to improve reports of suspicious activities have been implemented earlier this year,” N26 said in a company statement Wednesday, adding that it takes its “responsibility in the fight against the growing threat of global financial crime, and in the prevention of money laundering, very seriously.”
N26 said it has taken “numerous detailed measures” to strengthen its anti-financial crime controls.
The European Banking Authority (EBA) said last week that regulators are not up to speed on the risks associated as banks create digital marketplaces, highlighting the need to create a framework to identify potential issues that could arise as links strengthen.
In a report published by the EBA in June, the watchdog also outlined proposals to boost EU adoption and use of RegTech, which is mostly used to protect against money laundering, to counter terrorism financing and to prevent fraud as well as for prudential reporting, ICT security and credit assessments.