German regulator Federal Financial Supervisory Authority (BaFin) has directed N26 Bank to bolster anti-money laundering controls.
The order comes after reports of failures on part of the bank’s to comply with customer due diligence (CCD) obligations.
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In March, German newspapers reported that an N26 customer account was hacked and illegal transfers of €80,000 was made.
Additionally, it was alleged that the N26 customer services did not address the issue with due seriousness, reported Reuters.
Subsequent investigations found that the German digital bank neglected security measures to prop up growth.
In its directive, BaFin ordered N26 to take necessary internal safety measures and comply with general CDD obligations.
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By GlobalDataFurther, N26 Bank is required to remove backlogs in IT monitoring and establish process descriptions and workflows in writing. It is also required to re-identify some existing customers.
N26 said that it is working with BaFin to implement the measures.
In a statement, the bank said: “We have also massively expanded our anti-money laundering and financial crime team and this team will continue to grow in the future.”
All the measures are needed to be implemented within a specified period of time.
Launched in 2013, N26 offers banking services in most of the Eurozone and in the UK. It also plans to expand to the US and Brazil soon.
In January this year, the company raised $300m in Series D funding round, which valued that company at $2.7bn.
