BaFin’s new Task Force is able to take action straight away in order to conduct ad hoc and special inspections on site. The Task Force began its activities about a year ago and has been working hand in hand with BaFin’s supervisory divisions and focus units ever since (see expert article of 1 March 2022).

BaFin President Mark Branson explained the reasons behind the establishment of this Task Force: “In urgent cases, we want to gain our own detailed understanding of the situation by going to the company’s premises ourselves.” He described the Task Force as an important part of the modernisation process that BaFin has been undergoing since 2021. Branson is certain: “We will increase BaFin’s effectiveness with this new Task Force.”

The Task Force operates on a cross-sectoral basis and can already boast a number of successes, reported Raimund Röseler, Chief Executive Director of Banking Supervision. He gave one example where the real estate portfolio and various instances of suspected money laundering prompted the Task Force to look into the initial stages of the lending process and the lending practices of an institution. In other cases, BaFin’s Task Force followed up on information provided by whistleblowers and took a closer look at allegations of manipulation.

Organisation of BaFin’s Task Force

BaFin’s Task Force has an interdisciplinary team. Experienced financial supervisors with expertise in the areas of IT forensics, finance and law are on board. The Task Force is supported by the BaFin division that supervises the entity in question and receives assistance from other BaFin experts as well. External specialists support the team as and where necessary. BaFin’s Task Force and Focus Units are coordinated by BaFin’s Coordination of Focused Supervision & Task Force Office, which is part of Strategy, Policy and Control at BaFin.

Areas in which BaFin’s Task Force can take action

For example, BaFin’s Task Force becomes involved if the business model of a supervised entity seems to lack transparency or if there are any irregularities in a particular case that are relevant to financial supervision, and there is a significant need for this to be clarified. The Task Force is also involved if certain issues cannot be clarified through the regular exchanges between BaFin and the entities under its supervision. “This is primarily the case if a company has breached any legislation or if its very existence could be at risk,” President Branson explained.

The Task Force can obtain information using forensic means and at short notice. This allows BaFin to gain a better understanding of the case in question and to respond appropriately. “With this new approach, we are entering new territory in the supervision of companies and we are significantly increasing our effectiveness here,” explained Chief Executive Director Röseler. Before the Task Force was established, forensics played a role at BaFin only in the area of enforcement relating to unauthorised business.

In addition to the information supplied by BaFin’s supervisory divisions, whistleblowers provide BaFin with information that is important for the Task Force’s work. The number of tip-offs has increased fourfold since 2017, as reported in BaFin’s expert article of 29 March 2022 . This information has proven to be very helpful for financial supervisors and will also be a key source of information for BaFin’s Task Force.

Legal framework

The activities of BaFin’s Task Force are based on all the legal provisions that are available to BaFin for the investigation of specific matters. The various supervisory laws that apply offer BaFin several options for taking action. For instance, BaFin has the right to obtain information and documentation and has the right to enter and inspect the premises of supervised entities. BaFin has search and seizure rights, too, provided that certain conditions are fulfilled. As a result of the German Act to Strengthen Financial Market Integrity (Finanzmarktintegritätsstärkungsgesetz – FISG), this also applies to financial reporting enforcement (see expert article of 27 January 2022 ).