BaFin Archives

ZuFinG II – The Next Step Towards Strengthening Germany as a Financial Hub?

by Annabelle Rau on Oct 10, 2024
Posted In Banking Law, Crypto Regulation, Financial Services, Payment Services

Following the initial steps with the Future Financing Act (“ZuFinG I“), the Federal Ministry of Finance presented the draft of the Second Future Financing Act (“ZuFinG II-E” and “Draft Bill“) on 27 August 2024. The Draft Bill aims to further develop the German financial market and revise some of the existing regulations. The primary focus is on facilitating access to the capital markets and relieving financial actors from excessive bureaucracy.

New Regulations for Payment Service Providers Regarding Customer Funds

Payment service providers are required to safeguard customer funds they receive according to the methods outlined in the German Payment Services Supervision [...]

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ZAG-MaRisk

by Kai Grandpierre on Jun 17, 2024
Posted In Financial Services, Payment Services

On May 27, 2024, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin“) published the final version of the Circular on the Minimum Requirements for Risk Management of Payment Institutions (“ZAG-MaRisk“). As a result, payment institutions are subject to payment specific minimum requirements for the first time and may not rely on the Minimum Requirements for Risk Management for Credit Institutions (“MaRisk (BA)“) anymore. The ZAG-MaRisk specifies the requirements for the proper business organization of institutions on the basis of Section 27 (1) of the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – “ZAG“). In addition, it [...]

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Update for crypto asset service providers: Draft bill to transfer German crypto regulation to the EU MiCAR regime

by Annabelle Rau on Apr 24, 2024
Posted In Crypto Regulation, Financial Services

On April 5, 2024, the German Federal Ministry of Finance (BMF) published a draft bill for two regulations intended to facilitate the transition of national crypto regulation into the EU MiCAR regime.
These proposed regulations specify the simplified authorization procedure and create the possibility of submitting applications before the MiCAR regulations become fully applicable.

In brief: Simplified authorization procedure for already regulated institutions

At the end of 2023, the German legislator presented the draft Financial Market Digitization Act (“FinmadiG“), which, among other things, provides for a separate Crypto Markets Supervision Act (“KMAG“) (we [...]

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BaFin Declines to Act Against PFOFs (For Now)

by Renate Prinz and Frederic Peine on Apr 18, 2024
Posted In Banking Law

The Federal Financial Supervisory Authority (BaFin) will, for now, not take action against payments by third parties to investment firms (Wertpapierfirmen) for forwarding client orders (known as payment for order flow, or PFOF).

In an announcement dated 22 March 2024 BaFin stated that, should investment firms violate the PFOF prohibition with domestic clients, it will refrain from taking measures or imposing sanctions until the completion of the national legislative process in Germany. The PFOF prohibition, as contained in the amended version of the Regulation (EU) No. 600/2014 of the European Parliament and of the Council (MiFIR), stipulates that investment firms [...]

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Update for securities institutions: German Securities Institutions Owner Control Ordi-nance published

by Annabelle Rau on Jan 17, 2024
Posted In Banking Law, Financial Services

On January 15, 2024, the German Securities Institutions Owner Control Ordinance was published in the Federal Law Gazette and thus entered into force today, January 16, 2024.

Owner control procedures for securities institutions

The Securities Institutions Owner Control Ordinance regulates the material and formal requirements for the acquisition of a significant shareholding in a regulated securities institution (so-called owner control procedure).

A significant or qualified shareholding is defined as the direct or indirect holding of shares in a company that represents at least 10% of the capital or voting rights of this company or that otherwise enables the exercise of [...]

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Amendment of the Owner Control Regulation

by Kai Grandpierre on Jan 2, 2023
Posted In Banking Law, Financial Services

On December 28, 2022, the amended “Regulation on Notifications in Accordance with Section 2c of the German Banking Act (Kreditwesengesetz – KWG) and Section 104 of the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG)”, the Owner Control Regulation (Inhaberkontrollverordnung – InhKontrollV, also referred to as Holder Control Regulation by BaFin), became effective. The amendment expands the scope of the documents and declarations to be submitted, but at the same time contains partial relief for the party subject to the notification requirement.

Consideration of the changes to the KWG and the VAG

The amendments to the InhKontrollV take into account the [...]

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BaFin considers dark patterns in trading apps and trading portals to be unlawful

by Annabelle Rau on Nov 24, 2022
Posted In Securities Service Providers

On November 21, 2022, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin“) clarified in a statement that investment firms are not allowed to use dark patterns in trading apps or trading portals. Against this background, BaFin also published two new FAQs on the conduct of business rules for investment firms.

In BaFin’s opinion, dark patterns in digital decision worlds (“choice architecture“) violate the ban of misleading information and the principle of fairness and are therefore unlawful.

What are dark patterns?

Dark patterns are when individual buttons in apps or on websites have a significantly lower [...]

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ESG risks & Co. in the 7th MaRisk update

by Annabelle Rau on Oct 14, 2022
Posted In Banking Law, Sustainability Risks

On September 26, 2022, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin“) published an amended draft of its circular “Minimum Requirements for Risk Management” (Mindestanforderungen an das Risikomanagement – “MaRisk“), which is now open for consultation.

MaRisk codifies BaFin’s administrative practice on risk management for German banks, particularly with regard to business organization and outsourcing, and in doing so specifies the statutory requirements of Section 25a of the German Banking Act (Kreditwesengesetz – „KWG“).

The draft of the 7th MaRisk amendment includes, among other things

the implementation of the European [...]

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BaFin on the new sustainability exploration in investment advice and financial portfolio management

by Annabelle Rau on Aug 17, 2022
Posted In Financial Services

In a publication dated August 3, 2022, BaFin referred to the now applicable obligation of investment advisors and financial portfolio managers to conduct customer exploration with regard to the sustainability preferences of customers.

Customer exploration now also includes sustainability factors, which is why the suitability check and declaration is expanded to include the aspect of the customer’s sustainability preference.
The background is the Delegated Regulation (EU) 2021/1253 of the European Commission, which regulates the inclusion of sustainability factors, risks and preferences in certain organizational requirements and conditions for the operation of securities firms.

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