BaFin Investigates Flab Group LTD for Alleged Unauthorized Activities

BaFin, the German financial market regulator, has launched an investigation against the trading platform operated by Flab Group LTD. According to the advisory issued by the watchdog, the trading platform is not regulated by the German authorities and could be offering unauthorized banking and financial services within the country.

The firm behind the website is licensed under the jurisdiction of St. Vincent and the Grenadines to provide banking activities. However, it doesn’t grant the company automatically the proper legal power to offer such services in Germany, the regulator stated. “The content of the website operated by Flab Group LTD, as well as information and documents available to BaFin, justify the assumption that the company offers unauthorized banking and financial services in Germany. Providers of banking or financial services in Germany require a permit under the KWG. However, some companies act without the required permission,” BaFin noted.

In the same warning note, the Federal Criminal Police Office (BKA) and the State Criminal Police Office asked people to exercise caution when dealing with the unlicensed company, which is still under investigation by the German authorities. As of press time, there are no further updates on whether the watchdog concluded that Flab Group LTD didn’t comply with the legal requirements to operate in Germany.

Recent BaFin Actions

In May, BaFin issued an order against the neobanking company N26 to strengthen controls and safeguards over preventing money laundering and terror financing using the platform. The regulator appointed a “special commissioner,” who will be responsible for monitoring the order’s implementation. Though the order stressed that the digital bank should comply with the general due diligence requirements, it did not specify any violation on the part of the company.

However, N26 detailed that fraudsters were misusing the platform by pushing third parties to open accounts, which were used for fraudulent purposes.

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