Germany's federal financial watchdog, BaFin, has directed NordLB to update and rectify its customer records after concluding the Hanover-based bank breached provisions of the country's anti-money laundering law.
In its order, BaFin pointed to shortfalls in NordLB's customer due diligence processes, as well as a substantial backlog in bringing customer information up to date. The regulator said these weaknesses amounted to violations of the Money Laundering Act and instructed the bank to draw up and carry out a plan to bring its customer data and related procedures into compliance with statutory requirements.
BaFin's directive was made legally binding on June 14, according to the regulator. The measure requires NordLB to submit a remediation plan and to implement the steps set out in that plan so that its customer information and monitoring practices meet the legal standard for preventing misuse of banking services.
NordLB responded by saying it is in "close, constructive and solution-oriented communication" with BaFin regarding the order and that it has already made material progress. The bank added: "We are working intensively to meet the requirements and have initiated appropriate measures. The required plan has already been developed and is being consistently implemented."
The Money Laundering Act mandates that banks carry out customer due diligence obligations. Those obligations include monitoring business relationships and maintaining up-to-date customer data so that banks' services are not used for criminal activity or the financing of terrorism.
Summary
BaFin has found NordLB in breach of the Money Laundering Act due to deficiencies in customer due diligence and a backlog in updating customer records. The regulator ordered a remediation plan and made the order legally binding on June 14. NordLB reports active engagement with BaFin and says it has developed and started to implement the required plan.
Context and next steps
- BaFin requires NordLB to submit and execute a plan to update customer data and related processes in line with the law.
- The bank has stated it is cooperating with BaFin and has initiated measures to meet the regulator's requirements.
- The order was declared legally binding on June 14.