Launching a digital bank? A short name seems to be useful. Germany's N26 is on the rise again after allegations of flaws in its money laundering controls killed momentum at the digital bank back in 2021. It was fined €4.25 million euro and a further €9.25 million in May 2024 for filing late reports on suspected money laundering. But with the departure of a supervisor imposed by German regulator Bafin, the bank says it is operating profitably since the middle of last year. "Sign-ups for the app-based bank were now 'up to 250,000 a month', the person said, surpassing the 170,000 reported before German financial regulator, BaFin, decided in 2021 to impose a 50,000-a-month cap on new customers," reports the FT. "The regulator's decision stemmed from alleged flaws in the bank's anti-money laundering controls. The bank has implemented a digital model incorporating more than 300 data points to assign dynamic fraud probability scores to every customer. The system had sharply reduced fraud on its platform, according to people familiar with the matter, at a quarter of the cost of fraud prevention at traditional banks." The chief executive Valentin Stalf had previously said BaFin's intervention cost the bank billions of euros in 'opportunity costs'. Like Revolut, N26 offers a crypto trading wallet. Originally backed by Peter Thiel and Tencent among others, it had entered and exited the US and UK markets, and admitted it might have been better focusing on crypto and trading, like competitor Revolut. It now operates across 24 countries in Europe.
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