Bafin’s announcement marks an escalation of previous warnings to the popular Berlin-based start-up, which has been criticized in the past for failing to properly verify the identities of new customers.
“Bafin ordered N26 Bank GmbH to rectify the deficiencies in both IT monitoring and customer due diligence,” the regulator said in a statement.
N26 “is required to ensure that it has adequate personnel, technical and organizational resources to comply with its obligations under the anti-money laundering law,” he said.
A “special commissioner” would oversee the company’s efforts, Bafin added. Founded in 2013 and known for its transparent debit cards, digital bank N26 is one of Germany’s foremost financial technology or “fintech” companies and now has seven million customers in 25 countries.
Its rapid growth is based in part on accelerated identification procedures for new customers.
In 2019, the German business weekly WirtschaftsWoche reported having successfully opened accounts using fake ID.
N26 pledged Wednesday to “work closely” with Bafin and the special representative.
He said he had already considerably strengthened measures to prevent money laundering in recent years, “but we recognize that more needs to be done in this area.”
The coronavirus crisis has contributed to an increase in fraudulent online transactions around the world, N26 added, “increasing the demands on banks in the fight against crime.”