By 
Germany’s financial watchdog, BaFin, is reportedly poised to ease its stringent oversight on FinTechs, signaling a shift in regulatory approach.
According to Bloomberg’s report on Wednesday (Feb. 21), BaFin Executive Director Birgit Rodolphe revealed that the regulator intends to relax restrictions on FinTechs following notable improvements in compliance measures by several firms.
“We are observing advancements in individual firms, albeit not across the board,” Rodolphe stated in the report. “There will certainly be instances where we will loosen restrictions this year.”
In recent years, BaFin has spearheaded a crackdown on neobanks and payment companies, imposing sanctions on approximately a dozen entities. These measures have included imposing limits on customer acquisition, prohibiting specific transactions, and mandating approval for business collaborations.
The intensified regulatory scrutiny followed BaFin’s failure to prevent the Wirecard scandal, prompting the appointment of Mark Branson as the new head of the regulator.
Acknowledging that the heightened oversight has led to increased operational costs for FinTechs, Rodolphe, who oversees the anti-money laundering unit, emphasized BaFin’s commitment to preventing financial crime. The regulator has deployed external monitors to oversee sanctioned firms’ progress in bolstering their compliance frameworks.
Rodolphe underscored that BaFin’s scrutiny extends beyond payment firms and neobanks, aiming to safeguard the financial system from illicit activities. She highlighted the vulnerability of payment transactions to money laundering and emphasized the need for robust controls.
BaFin is intensifying inspections at supervised entities, including FinTechs, to ensure sustained enhancements, the report noted. However, international watchdogs have criticized Germany’s anti-money laundering system for lacking coordination among relevant authorities.
Rodolphe emphasized the imperative of fortifying Germany’s financial system against money laundering by raising entry barriers. She outlined plans to conduct thorough inspections at supervised firms to foster enduring improvements and expand the scope of regulatory supervision.
In November 2022, BaFin launched the FinTech Innovation Hub, serving as a platform for dialogue between policymakers and FinTech companies. The initiative aims to facilitate communication of regulatory guidelines to both existing and prospective FinTech players under BaFin’s purview, functioning as a knowledge hub and publishing outlet for the regulator.
Comments