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BaFin to Lift Growth Restrictions on N26


European digital bank N26 reports that Germany’s Federal Financial Supervisory Authority (BaFin) has lifted its growth restrictions on the company, effective June 1.

This move follows N26’s investment in teams and infrastructure to combat financial crime and money laundering, the company said in a Monday (May 27) press release.

Those efforts will continue after the removal of the growth restrictions, as will N26’s cooperation with BaFin, according to the release.

Under BaFin’s restrictions, N26 has been limited to adding 60,000 new customers per month, the release said.

BaFin fined N26 almost $5 million in September 2021 after ordering the company to beef up its anti-money laundering (AML) protocols twice in the previous two years and taking the unusual step of assigning a special supervisor to monitor the online bank.

N26 said in a statement at the time that the penalty related to the late filing of almost 50 suspicious activity reports in 2019 and 2020.

The company exited the U.S. market in 2022, choosing to focus its efforts on Europe.

Over the past two years, N26 has invested more than 100 million euros in compliance, infrastructure and teams to combat money laundering and financial crime, according to the Monday press release.

The infrastructure the company has added includes intelligence-based models that analyze the fraud potential of customers before they open an account as well as self-learning transaction monitoring systems that detect suspicious activity in real time, per the release.

“We are pleased about the trust of our regulators and will continue our close exchange in the future,” Valentin Stalf, CEO of N26, said in the release.

Maximilian Tayenthal, co-CEO and chief operating officer of N26, added in the release: “Our infrastructure and our use of modern, intelligence-based technology enable us to detect and combat money laundering and fraud in real time.”

PYMNTS Intelligence has found that in the United States, 48% of financial institutions are in the process of adding or will add new tech systems to combat fraud in the next year.

The amount these organizations lost to fraudulent transactions nearly doubled from 2022 to 2023, according to “The State of Fraud and Financial Crime in the U.S. 2023,” a PYMNTS Intelligence and Hawk AI collaboration.