N26, the Berlin-based start-up, will continue to face growth limitations due to the requirements set by the Bafin banking supervisory authority. The Bafin has ordered that N26 can only accept a maximum of 50,000 new customers per month. The Bafin stated that despite some progress, N26 still has deficiencies in preventing money laundering and terrorist financing, particularly in its suspicious activity reporting system. The Bafin has outlined several requirements that N26 must fulfill, including creating adequate IT monitoring, setting up a quality assurance function, and establishing effective controls for outsourcing.
To ensure compliance, the Bafin has extended the mandate of a special representative who will monitor N26’s implementation of anti-money laundering measures. If the special representative determines that N26 is making reasonable progress in addressing the deficiencies, the cap on new customer growth may be relaxed. The Bafin has been taking action against neo-banks like N26, C24, and Solarisbank, as well as online brokers like Flatexdegiro.
The Bafin believes that N26 has grown too quickly without developing its processes and controls accordingly. In 2021, Bafin accused the start-up of not doing enough to combat money laundering given its rapid growth and imposed a fine of 4.25 million euros for late submission of suspicious money laundering reports. In response, the Bafin appointed a special representative in May 2021 and restricted N26’s acceptance of new customers in November.
N26 stated that it had fully complied with the 2021 business organization and risk management order. The company claimed to have made significant investments in preventive measures against money laundering, including increasing its staff and optimizing its technology. N26 has more than eight million customers in 24 countries and an annual transaction volume of over 100 billion euros. Currently, it employs over 1500 people.