N26 Banned by Italian Central Bank for Insufficient Money Laundering Controls

Richard Marley
March 31, 2022
2 minutes read
2036

The central bank of Italy has banned German digital bank N26 from onboarding Italian customers after a recent investigation showed insufficient AML systems.

The Bank of Italy said it “adopted a measure banning the Italian branch of N26 Bank from undertaking operations with new customers and from offering new products and services to existing customers (i.e. crypto assets)”.

The Italian central bank said that the decision followed an on-site inspection late last year, which revealed “significant shortcomings in respect of anti-money laundering legislation”.

The Bank also said that N26 had taken steps to overcome these weaknesses and that the Bank of Italy will analyze whether the shortcomings have been addressed before reconsidering the current ban.

The Berlin-based digital Bank was founded in 2013 and was previously under the pressure of sanctions for inadequate anti-money laundering controls. In September 2021, N26 was fined €4.25m by the German financial services regulator, BaFin, for its weak AML practices.

Financial crimes like money laundering and their relation with organized crime are serious issues for banks and financial institutions throughout the world.

According to the UN, up to $2tn is laundered each year, with criminals using banks to obscure the origins of their money. In the UK, the National Crime Agency (NCA) estimates that money laundering costs the country’s economy £24bn each year.

Banks and financial institutions that fall short in developing robust AML policies are often hit with hefty penalties from financial regulators across Europe.

Based on research published last year by business-to-business (B2B) information services company Kyckr, 28 financial institutions across the globe were fined for AML-related violations in 2020, which is equal to £2.6bn.

The UK is a place where the second-highest amount of money is laundered globally each year, with an estimated £88bn obscured by criminals annually.

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

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IMF Urges Central Bank of Seychelles to Upgrade Transparency and AML Controls
The Central Bank of Seychelles (CBS) has been advised by the International Monetary Fund (IMF) to have transparent practices and AML controls.

The International Monetary Fund (IMF) has urged CBS, the Central Bank of Seychelles, to incorporate refined practices in different accountability and governance areas. These include confidentiality, supervisory & confidentiality policies along with internal AML/CFT protocols.

According to the statement by IMF, CBS is giving information regarding legal structure, mandate, and a few key elements related to anti-corruption arrangements, risk and human resource management, and accountability on its website.

The review of IMF stated, “To better support the public’s perception of the CBS as a well-governed institution, it should consider highlighting these aspects in its annual report, and/or provide additional information on its website, particularly on human capital management, anti-corruption policies and decision-making arrangements.”

As per IMF’s review, CBS needs to work on several elements, including information’s accessibility to its internal governance arrangements. It could be done by maintaining the Annual Report’s respective sections and website. Moreover, it must overhaul the proceedings by publishing its Code of Conduct and Ethics.

“The legal mechanism for confidentiality issues has been established, but the dissemination and disclosure of the confidentiality framework could be enhanced. The CBS discloses basic information on its AML/CFT supervisory powers and policies, as well as on its related internal control framework, but disclosures on the processes and outcomes of its AML/CFT external policies and internal controls are limited,” said CBS Transparency Code Review of IMF.

IMF review said that the ensurance of transparency practices with new functions and powers by CBS would be effective for its own benefit. The practices adopted by CBS must comply with the powers acquired by the coming legislative act.

IMF’s CBS Transparency Code Review said, “In the last few years, the CBS’s regulatory powers have been substantially expanded with the adoption of AML/CFT Act and Financial Consumer Protection Act. Moreover, the forthcoming Financial Stability Act is expected to provide a transparent legal basis for the CBS’s (and other financial sector regulators) actions on financial stability. These legislative acts will require an expansion of the CBS’s transparency practices so that the related CBS activities continue to be appropriately disclosed to stakeholders.”

The review aims to identify the strength and improvement areas of CBS by allowing it to evaluate its transparency practices. The review presents the map of CBS’s transparency choices in comparison to several practices in three different categories (core, comprehensive, and expanded).

Suggested Read: FCA Advises Firms to Embed Data and Technology to Combat Financial Crimes

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N26 Banned by Italian Central Bank for Insufficient Money Laundering Controls

An Overview of Perpetual KYC

The Need for Perpetual KYC in Banking Sector

Recent Crime Cases in the Banking Industry

Criminal Gang in US Charged with Bank Fraud and Money Laundering

Two Former Employees of Major Bank Charged with Loan Fraud

Global Regulatory Authorities Monitoring the Banking Sector

US

UK

Securing Banking Organizations Through Perpetual KYC

What Shufti Pro Offers?

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