Solaris SE must improve controls or face penalties

German financial regulator BaFin announced on Friday (12 July) that Solaris SE faces financial penalties if it fails to improve controls.

Solaris, which holds a banking license in Germany but focuses on providing white-label services to other banks, has not fixed the issues ordered by BaFin in 2022, Bloomberg reported on Friday (July 12), citing a statement from BaFin.

In addition, BaFin said that new issues had emerged at Solaris since 2022, and the regulator extended the mandate of the independent monitor that had previously been assigned to Solaris, according to the report.

A Solaris spokesperson told Bloomberg that the extension of this monitoring “is a formality” and will not affect the company’s day-to-day operations. He added, according to the report, that Solaris “continues to make significant progress in working with the regulator to implement additional measures to address identified deficiencies.”

According to the report, BaFin focused mainly on digital start-up banks and its actions were aimed at preventing financial crimes such as money laundering.

In February, it was reported that the financial watchdog was going to ease its crackdown on FinTech firms after several companies improved their controls.

In recent years, BaFin has announced sanctions against more than a dozen neobanks and payment companies, imposing measures such as limits on customer growth, bans on certain transactions and approval requirements for business partnerships.

“We are seeing progress in individual companies, but not across the board,” BaFin Chief Executive Birgit Rodolphe told Bloomberg in February. “There will certainly be cases where we ease restrictions this year.”

In April, BaFin fined Commerzbank $1.5 million for anti-money laundering violations, finding the bank failed to update customer data on time and ensure sufficient security measures.

Commerzbank then informed Reuters that it had re-analyzed and updated customer data.

In May, European digital bank N26 said BaFin had lifted growth restrictions imposed on the company from June 1, after the bank invested in teams and infrastructure to combat financial crime and money laundering.

Over the past two years, N26 has invested more than €100 million (approximately $109 million) in compliance, infrastructure and teams.

Under BaFin restrictions, N26 could accept a maximum of 60,000 new customers per month.