Erscheinung:07.03.2023 | Topic Measures flatexDEGIRO Bank AG and flatexDEGIRO AG financial holding group: BaFin orders supervisory measures
flatexDEGIRO Bank AG must ensure that it has a proper business organisation in place in the areas of risk management and money laundering prevention. The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) issued the institution this order on 17 February 2023. This measure is a consequence of the company’s violations of the requirements for proper business organisation as laid down in provisions of the German Banking Act (Kreditwesengesetz – KWG), the German Money Laundering Act (Geldwäschegesetz – GwG) and other legislation.
flatexDEGIRO Bank AG must now remedy serious shortcomings in its internal controls, its supervisory reporting system and in the area of money laundering prevention. A special commissioner appointed by BaFin is monitoring implementation of the measures ordered.
In this connection, BaFin issued a final and binding administrative order on 7 February 2023 imposing a fine in the amount of €1,050,000 on flatexDEGIRO Bank AG because the institution had violated banking supervisory regulations.
In addition, BaFin had issued an order on 8 September 2022 subjecting flatexDEGIRO Bank AG and flatexDEGIRO AG, as the superordinate entity of the flatexDEGIRO AG financial holding group, to additional own funds requirements.
These measures have been final and binding since 21 February 2023.
Background: proper business organisation
The purpose of a proper business organisation is to ensure that credit institutions comply with the legal provisions and meet business requirements. Section 25a (1) of the KWG stipulates how this is to be done. Significant elements of proper business organisation are effective, adequate money laundering prevention and a corresponding risk management system. The objective is to maintain the ongoing internal risk-bearing capacity of credit institutions.
Should BaFin conclude that an institution’s business organisation has shortcomings, the supervisors can take action. The basis for this is section 25a (2) sentence 2 of the KWG. For example, BaFin can issue an order requiring the institution to remedy the respective shortcomings, as in the case of flatexDEGIRO Bank AG. It can also require the institution to have own funds available in addition to those required by law. This is what BaFin has ordered flatexDEGIRO Bank AG and the flatexDEGIRO AG financial holding group to do.
Announcement
On 17 February 2023, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) ordered flatexDEGIRO Bank AG to take measures to ensure the institution has in place a proper business organisation in the areas of risk management and money laundering prevention and to limit risks.
To ensure a proper business organisation in the area of risk management, BaFin ordered flatexDEGIRO Bank AG to remedy several serious shortcomings, particularly in its internal controls, its supervisory reporting system and the area of money laundering prevention.
The measures are the consequence of violations of the requirements for proper business organisation within the meaning of section 25a (1) of the KWG and section 6 (1) of the GwG.
In order to monitor implementation of the measures ordered, BaFin appointed a special commissioner under section 45c (1) in conjunction with subsection (2) of the KWG.
In this connection, BaFin issued a final and binding administrative order on 7 February 2023 imposing a fine in the amount of €1,050,000 on flatexDEGIRO Bank AG. The order is based on a breach of duties under section 130 (1) of the German Act on Breaches of Administrative Regulations (Ordnungswidrigkeitengesetz – OWiG) in conjunction with offences that are punishable by a fine under the KWG and the European Capital Requirements Regulation (CRR).
Furthermore, flatexDEGIRO Bank AG and the flatexDEGIRO AG financial holding group were issued an order on 8 September 2022 requiring them to hold additional own funds.
Depending on the progress made in remedying the shortcomings, the measures may be adjusted following an assessment by BaFin in consultation with the special commissioner.
The orders are issued on the basis of section 25a (2) sentence 2 of the KWG and section 51 (2) sentence 1 of the GwG, and section 6c (1) sentence 1 no. 1 and no. 6 in conjunction with section 6b of the KWG.
Publication of this order is based on section 57 (1) of the GwG and section 60b (1) of the KWG.
The measures have been final and binding since 21 February 2023.
