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The German smartphone bank N26, which also has thousands of customers in Belgium, is thoroughly adapting its management in order to increase the control on money laundering. According to German media, this happened because the local financial regulator was in danger of losing patience.
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The German N26, whose shareholders include Paypal co-founder Peter Thiel and Kruidvat billionaire Li Ka-shing, is one of the most successful smartphone banks that can make it difficult for the classic players in the industry with a completely digital service.
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The hip neobank started in 2015 and now claims to have more than 5 million customers in 25 countries. Belgium is also part of this: N26 does not provide concrete figures, but has been saying for some time that it has exceeded the milestone of 100,000 customers here. This year, that number itself should go towards 200,000.
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The essence
- German smartphone bank N26 has been told for years that it needs to do more to tighten its controls on terrorist financing and money laundering.
- According to the German daily newspaper Handelsblatt, the regulator Bafin is losing his patience and is now threatening that N26 will not be allowed to accept new customers for a while.
- The bank suddenly announced this week that it will expand its management with a chief of risk management and a specialist in money laundering controls.
- A reprimand from the regulator is inconvenient because N26 is said to be working on a capital increase.
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According to the German newspaper Handelsblatt, Bafin is of the opinion that N26 has still made far too little progress in this area. Handelsblatt also recently revealed that numerous accounts at N26 may have been misused by fraudsters.
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Running out of patience
As a result, the regulator began to lose patience and, according to the newspaper, threatened to restrict the activities of N26. For example, there was a chance that the bank would not be allowed to accept new customers for a while.
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At N26 they seem to have gotten the message. On Friday, a day after media reports about Bafin’s threats, the smartphone bank announced that it was making major changes to its management. In addition to appointing a new financial director, the bank also appointed a new head of risk management, as well as a chief to monitor progress in its anti-money laundering policy.
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“Extending our management to include governance, risk management, and anti-money laundering functions is an important step in our journey to become a truly global digital bank,” said co-founder and CEO Valentin Stalf.
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capital operation
For N26, a new reprimand from the regulator threatens to come at a very bad time. The bank is said to be currently negotiating a new capital round with potential lenders. According to some observers, N26 would like to raise up to $100 million, and the company would be valued at about $10 billion in that new operation. The bank itself has so far never wanted to comment on the reports of a possible capital operation.
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N26 is by no means the only neobank under the scrutiny of the regulators. Monzo, a British sector partner of N26, admitted earlier this month that the British financial regulator had also launched an investigation because the smartphone bank was also not very strict with its anti-money laundering checks for years.
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That research is still at a very early stage. But in his annual report Monzo does indicate that the file could have a ‘significantly negative’ impact on the bank’s financial position.
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