BaFin bans fintech Unzer after finding hundreds of front entities, a money-laundering risk.
Updated: Sep 7, 2022
Germany's financial regulator BaFin said today that hundreds of Unzer's commercial clients were fake companies.
The watchdog has put limits on the fintech and told them they can not take on any new customers.
Unzer was found to have a number of serious AML flaws, including monitoring of transactions that was patchy or non-existent.
One of the payment processor's "special payment service construction" had several hundred merchants, most of which were "front companies." This was one of the biggest problems.
BaFin found that this business's monitoring of transactions was "“patchy or non-existent."
This part of the business, which ran from 2018 to 2021, was "unusually profitable," which meant that there was a "very high risk of criminal money laundering activities."
The regulator has now put in place special representatives and told the company to take steps to make sure it meets all of its AML obligations and ensure "proper business organisation."
The company calls itself one of the "fastest-growing fintech companies in Europe." It has more than 750 payment and tech representatives all over Europe, and since 2020, KKR has been the majority shareholder.
This month, BaFin chose a special representative to keep an eye on how Unzer is doing with the steps the regulator told it to take. This representative keeps BaFin updated on Unzer's progress all the time.
In a statement, BaFin said that Unzer had been the subject of a special audit that found "a large number of deficiencies, some of which were serious" in the company's governance, control mechanisms, and procedures.
Unzer was founded in 2003 under a different name. In 2011, regulators gave the company the green light. After buying Clearhaus and QuickPay, the company changed its name to Unzer in 2020 and turned into a fully integrated payment platform.
This is the second FinTech to get in trouble with regulators over its AML and CFT protocols in the past few days. UK payments FinTech Wise was fined $360,000 in the UAE for a number of AML due diligence mistakes.
According to the regulator, the payments app only did enhanced due diligence on customers who were considered to be high risk. It did not take the nationality of customers into account when figuring out how risky they might be.
Wise Nuqud, a subsidiary of the fintech, paid the fine. This was done by the Financial Services Regulatory Authority (FRSA) of Abu Dhabi Global Market.
Another mistake was not getting permission from senior managers before doing business with high-risk customers.
By fLEXI tEAM