Time is short every time something strikes a bank as weird. Money houses only have 72 hours to report suspected money laundering. In cases of fraud, for example, with strange international transfers or transactions between companies that have already attracted attention. Each of these reports of suspected money laundering must then be sent quickly to the relevant collection point, the Customs Financial Intelligence Unit (FIU). A huge effort for the banks, for which the law sets clear guidelines.
Those who do not take this effort seriously face severe consequences. The smartphone bank N26 recently had to pay a fine of 4.25 million euros, as did the Bafin on Wednesday morning announced – an exceptionally large amount. According to N26, there are “fewer than 50 cases in 2019 and 2020” in which the bank had submitted reports of suspected money laundering late. The Bafin sent the notice of the fine, which has only now become known, in June. The amount had already been paid in full in mid-July, N26 announced.
The fine is part of a series of measures with which the Bafin is teaching the smartphone bank the hard way what it expects from a functioning anti-money laundering precaution. In May, the smartphone bank’s authority sent a special commissioner to prevent money laundering. As early as 2019, after a special audit of the bank, the Bafin complained about significant deficiencies, including in the prevention of money laundering, compliance and IT. In August she even threatened to impose N26 requirements for new business and further expansion abroad.
The violation was “serious, repeated or systematic”
On top of that comes the sensitive fine. The law only provides for penalties of this magnitude if it is a “serious, repeated or systematic violation”. When a company obliged to submit reports of suspected money laundering has been working improperly for a long time and has neglected its duties.
N26 only leaves it that way in the past tense. “All measures required by the Bafin to improve timely reports of suspicious activities have already been fully implemented by N26,” said the bank. In the current year alone, more than 25 million euros have been invested in combating money laundering, said a spokeswoman. Delayed suspicious transaction reports are to be avoided in the future, the real-time monitoring of accounts to curb fraud and money laundering has been expanded.
With N26, of all things, a bank has made it to one of the highest rated start-ups in Germany. Founded only seven years ago, the institute, which focuses on private and business customers, could be valued at up to ten billion euros in an ongoing financing round. With all its success, the bank has been noticed in cases of online fraud for years. N26 accounts are regularly misused, for example by criminals who use accounts opened by deceived third parties – or with forged documents – to collect money for goods that are offered online but never actually shipped.
Around the same time as the Bafin fine, it became known that N26 was losing one of its most important managers – which, according to the bank, has nothing to do with each other. Germany boss Georg Hauer is moving to the start-up Hawk AI and is to become chief financial officer and COO there. The search for a successor is well advanced, said a spokeswoman for N26.