In addition, UmweltBank AG must immediately take measures to comply with certain conduct of business obligations and organisational requirements under part 11 of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG). The institution has shortcomings in this regard.

BaFin had previously issued an order on 14 June 2023 requiring UmweltBank AG to ensure that it has in place a proper business organisation.

The notices are final and binding.

Background information:

Pursuant to section 25a (1) of the German Banking Act (Kreditwesengesetz – KWG), an institution must have in place a proper business organisation which ensures compliance with business requirements and the legal provisions to be observed by the institution. A special inspection in 2022 concluded that the institution’s business organisation was not proper within the meaning of section 23a (1) of the KWG in all inspected areas. The findings primarily related to the processes examined in the lending business and the internal audit function. It was for this reason that BaFin issued an order requiring UmweltBank AG to ensure that it has in place a proper business organisation in accordance with section 25a (2) sentence 2 of the KWG on 14 July 2023.

Part 11 of the WpHG contains conduct of business obligations and organisational requirements that credit institutions and investment services enterprises must fulfil. Ensuring there is a proper business organisation in place is a central requirement. Section 80 of the WpHG governs how this is to be done. An important factor here is having a permanent, effective and independent compliance function.

The conduct of business obligations relate to how banks deal with their customers. For example, all information that banks make available to their customers must be fair, clear and not misleading. The same applies to advertising by banks. This is governed by section 63 (6) of the WpHG. Furthermore, banks are only allowed to accept inducements – i.e. payments from third parties – if certain conditions are met (section 70 of the WpHG). Banks must properly document the fulfilment of these requirements.

The special commissioner monitors whether the institution makes progress in implementing its measures and reports on this to BaFin.

The publication of such measures takes place in accordance with the requirements specified in section 126 (1) of the WpHG and section 60b (1) of the KWG.