What is going wrong at C24 Bank?

The German Federal Financial Supervisory Authority (BaFin) has identified serious deficiencies at the Check24 banking subsidiary C24 Bank and has massively tightened its supervision. The core problem:

inadequate anti-money-laundering measures. As early as 2024, the bank had to pay a fine of 1,25 million euros because suspicious activity reports were sent late to the Financial Intelligence Unit (FIU). Now further deficiencies have been discovered:

• Deficient suspicious activity reporting: suspicious transactions were not reported, or reported too late.
• Weak compliance with information obligations: requests from authorities were answered incompletely or late.
• Accounts used for fraud: internal control mechanisms failed to detect misuse.
• Organisational deficiencies: lack of a risk culture, overload in the AML department and insufficient IT and staff resources.

Special commissioner:

BaFin is responding with tough measures: appointment of a special commissioner, higher capital requirements and close-meshed reporting. For customers, this means no restrictions on payment transactions for the time being, but stricter checks on transfers and questions about the origin of funds. Background: C24 Bank was founded in 2020 and pursues a strong digitalisation and scaling model. However, the rapid expansion apparently came at the expense of compliance. The case is a prime example of how fintechs under pressure to grow underestimate regulatory requirements – with costly consequences.

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