2023-08-03 17:58:05
Headquarters of the Varengold Bank in Hamburg
The bank is preparing for significant losses in the commission business.
(Photo: IMAGO/Hanno Bode)
Frankfurt The Hamburger Varengold Bank has to adjust to severe restrictions on its payment transactions for the time being. The financial regulator Bafin has banned the institute “due to high money laundering risks and serious deficits in money laundering prevention” from carrying out transactions with a certain customer group and with Iran.
“The transaction ban is intended to prevent the bank from being misused for money laundering,” said the Bonn authority.
The Bafin is also sending a special representative to the institute to check compliance with this order. “Should it be ensured in individual cases that transactions demonstrably do not constitute a violation of the law or a violation of sanctions, the special representative can release the transactions,” Bafin said. With its order, the supervisor reacted to a special test that it had initiated and had not yet completed.
A significant loss of commission income
The restrictions in its payment transactions are painful for Varengold Bank. The institute had already announced in June that it would “significantly restrict payment transactions with some of the international corporate customers in the commercial banking sector”. “This will lead to a significant loss of commission income,” wrote the institute in a mandatory notification.
The reason given by the bank was the special audit by the Bafin and “possible compliance violations” and the restructuring of its commercial banking business.
When asked by the Handelsblatt, the institute said that the Bafin’s allegations were “currently being intensively examined by all those involved”. The result of the special audit is not legally binding, but the bank has already initiated preventive measures in the area concerned.
The transaction ban is intended to prevent the bank from being misused for money laundering. Communication from BaFin
The Bafin special representative, who is the auditing company KPMG, is “already fully integrated”. The institute implemented cost savings due to the loss of earnings in the payment transaction business.
“Systematic and serious deficits”
In a mandatory announcement in June, the bank lowered its forecast for pre-tax profit in the 2023 financial year from originally EUR 40 to 50 million to EUR 10 to 15 million. For the years 2024 to 2026, the institute only expects a pre-tax result of five to ten million euros. The institute had announced a staff reduction of about a fifth of the workforce.
During its special audit, the Bafin stated that the institute “has systematic and serious deficits in compliance with and implementation of the money laundering requirements”.
On the one hand, the Bafin ban relates to transactions related to Iran and, on the other hand, to a specific customer group of the institute known as “payment agents”. This is probably about customers in commercial banking, some based abroad, who accept payments, some of which also come from abroad, and forward these payments – some within Germany, some abroad.
The Varengold Bank only supported transactions in the humanitarian area. These are permitted and approved and they are – and this is also the bank’s view – required. Opinion Varengold Bank
Apparently, it was not always transparent where this money came from and where it went. In any case, the Bafin complained in its communication about deficits in “enhanced due diligence obligations” and it calls for a monitoring system, “especially for transactions related to Iran”.
“Transactions in the Humanitarian Field”
The Varengold Bank had repeatedly commented on its Iran business in June and emphasized that it had not carried out any Iran business subject to sanctions.
“To be absolutely clear: Varengold Bank only supports transactions in the humanitarian area. These are permitted and approved and they are – from the bank’s point of view – required,” it said in a statement dated June 22.
Because of the restrictions in the important payment transaction business, the institute wants to expand the so-called marketplace banking, in which the focus, according to its own statements, is on cooperation with European fintechs, especially credit platforms. The same applies to the deposit business.
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