German digital bank N26 has been blocked from issuing new mortgage products in the Netherlands after regulators raised serious concerns about the bank’s anti-money laundering and compliance controls. The decision highlights continued regulatory pressure on fintech firms struggling to balance rapid growth with robust governance standards.
Germany’s financial regulator determined that weaknesses in N26’s risk management framework, internal controls, and AML processes posed unacceptable risks, particularly in higher-risk products such as mortgages. As a result, the bank is no longer permitted to expand its mortgage business in the Dutch market until these deficiencies are fully addressed.
The restriction is part of a wider supervisory action aimed at strengthening oversight of N26’s operations. Regulators have demanded improvements in transaction monitoring, customer due diligence, and internal reporting mechanisms, citing concerns that existing systems may not be sufficient to detect and prevent financial crime effectively. Enhanced supervision measures have also been introduced to closely monitor the bank’s remediation efforts.
This development adds to N26’s history of regulatory challenges, as the bank has previously faced scrutiny over AML compliance in multiple jurisdictions. While N26 has stated that it is cooperating with authorities and investing heavily in strengthening its compliance infrastructure, regulators remain cautious about allowing further expansion until tangible improvements are demonstrated.
The move serves as a clear signal to digital banks and fintech firms operating across borders that regulatory expectations around AML, governance, and risk management are non-negotiable. For N26, restoring regulatory confidence will be critical before it can resume growth in regulated lending products such as mortgages.
