Germany Lifts Signup Restrictions on Mobile Bank N26 After $10 Million Fine Paid to Regulator

Germany’s financial watchdog, the BaFin, has removed limitations it had imposed on the customer onboarding process of mobile banking startup N26, following a $10 million fine paid by the company. N26 had been facing a cap on new customer registrations since early 2021, when regulators discovered flaws in its anti-money laundering controls.

Founded in 2013, N26 operates a mobile-first current account and debit card offering which has seen rapid growth across Europe. However, its systems and processes came under scrutiny from BaFin last year when audits found that the bank was not fully compliant with all anti-financial crime regulations. This led to restrictions that prevented N26 from taking on more than 50,000 new customers each month.

Now, after N26 worked together with BaFin to improve oversight and invest in enhanced monitoring technology, the regulator says the issues have been sufficiently addressed. The fintech company has paid a significant penalty and put in place stringent new measures to thoroughly vet all account openings and transactions. With the limits removed, N26 can continue expanding its customer base across Germany and beyond as it works to scale up operations.

Industry observers will be watching to see how N26 safeguards against criminal misuse going forward. Mobile banking has opened financial services to many more people but also brings challenges in terms of oversight. If N26 demonstrates it has learned from its experience, this could strengthen the sector’s reputation for responsible practices.