Banking Regulations in Germany (BaFin) and the EU

Financial supervision is a complex endeavor. In addition to agreements between countries and the amount of new debt they can take on (commonly referred to as Basel I-III), as well as numerous EU-directives (such as the AIFM-directive), numerous administrative provisions (such as MaRisk and MaComp) do exist. In addition to relevant German laws (such as KWG, ZAG, WpHG, KAGB), companies and entrepeneurs entering the German / European market should determine if they require a license to operate their banking enterprise.

The BaFin (whose full name would translate to Federal Financial Supervisory Authority) is concerned with regulating Germany's financial world. By now, the sheer majority of activities in the banking sector require a BaFin license. Small companies do, at times, offer services for which they would require a BaFin license - without having one. Doing so is punishable under German law and we strongly advise against it. The best way to avoid any issues with the BaFin is checking before commencing operations in Germany. An experienced and qualified attorney can prove as a tremendous advantage. However, at times, companies are offering financial services without a valid BaFin-license and get contacted by the BaFin. We can help with such cases as well.

Please also note that a BaFin license is often valid for just the particular purposes you listed in your application. Chances are, you need a new license when offering new financial services.

might also need a BaFin license. This depends on their business model and a german law called Zahlungsdiensteaufsichtsgesetz (ZAG, the German Payment Services Regulation Act). New currencies, such as Bitcoin or other virtual currencies are classified as financial instrument, or precisely as units of account by the BaFin. If your are dealing with such coins in a professional manner, chances are high that you require a BaFin-license. This also applies for setting up a FinTech business in Germany.

seek advice to comply with the respective laws. We help you examining, if you require a license and prepare you as good as possible to obtain one, by elaborating on points such as:

• What kind of financial service(s) will you offer? Do you already plan to implement additional services in the forseeable future? Where could potential conflicts arise?
• What personal requirements do you have to meet and how much capital is required?
• Which risk control measurements should be implemented and how do you integrate them with compliance guidelines?
• What model contracts should you submit to BaFin?

You should also know that consultation regarding capital markets investments requires you to observe certain documentation laws. Money laundering, authentification ( both are part of KYC - Know your customer) and risk management are further important points.