The financial regulator Bafin has imposed a fine of 9.2 million euros on the Berlin financial start-up N26. This is the highest fine that the fintech has ever had to pay and also one of the higher fine notices that Bafin has issued in recent years. The start-up founded by founders Valentin Stalf and Maximilian Tayenthal has to pay the fine because it did not submit so-called suspected money laundering reports in a timely manner. Banks, fintechs and other financial institutions must submit such reports if unusual payments flow through their accounts and channels. It is important that they are received on time in order to prevent criminal financial transactions in a timely manner.
The Bafin checks whether the financial institutions submit the reports correctly and quickly and usually only imposes small fines in the event of violations. The fact that N26 now has almost ten million euros is due to the fact that the financial start-up even “systematically” screwed up in 2022 – and again and again. Apparently the Bafin didn’t want to put up with that. After all, N26 has been in the focus of financial supervisors for a long time. The start-up, which had been growing rapidly up to that point, had already clashed with financial supervisors for the first time in 2018, and back then it was already about money laundering prevention processes. In 2019, research by NDR and Süddeutscher Zeitung showed that criminals opened various accounts with N26 and allegedly laundered money from so-called fake shops.
N26 has had to deal with Bafin since 2021
In 2021 the Bafin finally had enough. In May, she ordered N26 to finally get its money laundering prevention under control. To check progress, the financial regulator even sent a special representative to the neobank. In June 2021, Bafin fined the start-up more than four million euros and then took further tough action: She limited the number of new customers for N26. Since then, the neobank has only been allowed to accept 50,000 customers per month. Last October The limit was raised to 60,000 customers. It was still a painful break for the start-up, as N26’s business model is designed for rapid growth and rapid expansion.
In order to get rid of the Bafin restrictions, N26 has recently invested a lot of effort and money. According to its own information, the start-up has invested more than 80 million euros in technical infrastructure and personnel in recent years in order to comply with the “highest industry standards” in combating money laundering, according to a current statement.
The fine was high, but N26 can hope
This was apparently well received by Bafin. Recently there have been increasing signs that N26 has probably survived the worst. On the FinanceFWD Conference Founder Valentin Stalf, for example, said that the bank had done its regulatory homework. He hinted that he expects the Bafin measures to end next year at the latest. The founder is not alone in this view. There has also been speculation in the banking scene for some time that N26 could soon be operating without Bafin restrictions after three tough years.
Even if it initially seems that way, the fine notice should not be a setback in this direction. The fine was quite high at 9.2 million euros. But the start-up says it has set up provisions to cover this financially. And what’s even more important: N26 made the mistakes two years ago. Since then, efforts have clearly been made to remedy the deficiencies. And yes, the start-up is on the right track in this regard, according to people familiar with the matter. The fine could be the last of its kind before things get better for N26. There are many plans for the time afterwards. Perhaps the biggest one: One day it will go public.