Germany’s financial regulator, the BaFin, has imposed stringent regulatory measures on Payone, a leading payment service provider. Due to significant deficiencies in its anti-money laundering (AML) controls and IT infrastructure, the company must now hold additional capital reserves and rectify these issues under the supervision of a special commissioner.
The decision follows a 2022 special audit, which found that Payone did not fully meet the legal requirements of the Zahlungsdiensteaufsichtsgesetz (ZAG) regarding business organization and outsourcing. In particular, the company’s IT infrastructure and processes failed to comply with the regulatory circular ZAIT 11/2021, which outlines IT supervisory requirements for payment and e-money institutions. To mitigate risk, BaFin has mandated that Payone maintain additional capital reserves until all deficiencies are resolved.
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Key Deficiencies Identified in Payone’s AML and IT Compliance
A second special audit and the financial statement review for 2023 further revealed that Payone was not fully compliant with the Money Laundering Act (GwG). Major deficiencies were found in key areas, including:
- IT-based transaction monitoring – Ineffective systems for detecting suspicious activities
- Risk assessment of business relationships – Inadequate evaluation of potential AML risks
- Customer data updates – Delays and gaps in ensuring accurate client records
In response, BaFin has ordered Payone to:
- Maintain additional capital reserves until all deficiencies are fully corrected.
- Implement sustainable measures to prevent future AML compliance breaches.
- Cooperate with a special commissioner, who will oversee the execution of BaFin’s directives and report regularly on progress.
Legal Basis and Regulatory Enforcement
BaFin’s enforcement is grounded in several key regulations:
- Section 15(2) ZAG – Requires institutions to maintain adequate capital reserves.
- Section 27(3) ZAG in conjunction with Section 51(2) GwG – Addresses deficiencies in AML compliance.
- Section 20(2) ZAG in conjunction with Section 45c KWG – Justifies appointing a special commissioner.
The official notices enforcing these measures have been legally binding since November 17, 2024, and January 21, 2025. The publication of these actions complies with Section 27(2) ZAG in conjunction with Section 60b KWG and Section 57 GwG.
Payone Strengthens Capital Reserves and Plans Compliance Overhaul
Despite the regulatory intervention, Payone asserts that it has already taken steps to reinforce its financial stability. The company announced that, independent of BaFin’s directives, it significantly increased its capital base in late 2023. This capital infusion, backed by S-Payment (DSV Group) and Worldline (Worldline Group), is intended to bolster financial security and demonstrate a commitment to responsible corporate governance.
A Payone spokesperson stated:
“Due to the already completed capital increase, Payone is under no immediate pressure to meet BaFin’s requirements. Sufficient freely available capital reserves are in place.”
Moreover, the company views BaFin’s measures as an opportunity to enhance business operations and compliance frameworks. The spokesperson added:
“Our primary focus remains on strengthening trust among customers, business partners, and stakeholders by prioritizing transparency and accountability in all aspects of our operations.”
Implications for Payone’s Business and Reputation
BaFin’s actions highlight the regulator’s intensified scrutiny of financial institutions, especially in the wake of past regulatory failures, such as the Wirecard scandal. Payone now faces a prolonged period of regulatory oversight and reputational risk. The presence of a special commissioner means that its business decisions, AML policies, and IT systems will be subject to continuous monitoring.
While the special commissioner does not currently block Payone’s business expansion, their role includes:
- Monitoring remediation efforts and ensuring compliance with BaFin’s directives.
- Advising on necessary structural and procedural improvements.
- Serving as a direct point of contact with BaFin.
The appointment of a special commissioner is a serious regulatory warning that could have long-term implications for Payone’s market position and operational flexibility.
Conclusion: A Critical Compliance Test for Payone
BaFin’s enforcement action against Payone underscores the growing importance of robust AML compliance and IT security within financial institutions. The regulator’s decision reflects a broader effort to prevent financial crime and strengthen the integrity of Germany’s payment services sector.
For Payone, this regulatory scrutiny represents both a challenge and an opportunity—a challenge in the form of heightened oversight and reputational damage, but an opportunity to demonstrate a commitment to compliance, transparency, and customer trust.
As the company works through these measures, it remains to be seen whether its efforts will satisfy BaFin’s expectations and restore full regulatory confidence.
Related Links
- BaFin Official Announcement
- Money Laundering Act (GwG) – German Legislation
- BaFin’s ZAIT Circular on IT Security
- Wirecard Scandal Overview – Financial Times
- Worldline Official Statement
- European AML Regulations Overview
Other FinCrime Central Articles about Compliance Monitoring
- Germany’s BaFin says senior bank staff should have better IT knowledge under new DORA rules
- TD Bank Explores Compliance Monitoring to Strengthen AML Framework
- Deutsche Bank’s Monitor Removed by German Regulator
Source: IT Finanzmagazin
