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FRANC

‘Unique situation’ led to Swiss franc move: US

Switzerland has been "disproportionately" affected by volatility on the foreign-exchange market due to the eurozone's financial crisis, a US official said Wednesday.

Asked at a Washington news briefing about Switzerland’s surprise action on Tuesday setting a cap on the Swiss franc’s rise against the euro, a Treasury official, speaking on condition of anonymity, said she could understand it.  

“Switzerland has quite unique sets of challenges. It’s situated in the middle of Europe and has been, I think, quite disproportionately affected by the financial stresses in Europe,” the official said.  

“It’s a quite unique circumstance where you see quite disorderly movements associated with its unique position,” she added.  

The Swiss National Bank surprised markets on Tuesday by placing a floor on the euro’s value against the Swiss franc, targeting it at 1.20 versus the European currency, to deal with vast rises in the value of the traditional safe-haven franc amid financial turmoil.  

The central bank vowed to do everything possible, including buying “unlimited quantities” of foreign currency, to prevent the franc from rising.  

For Washington, this decision does not change the view of the Group of Seven advanced economies on foreign exchange.  

“The G7 in the past said it will be vigilant on excessive volatility and disorderly movements in foreign exchange rates, so my anticipation is that the position with regard to support for market-based exchange rates will continue to be a central thrust of our discussions,” the official said.  

The G7 finance chiefs are set to meet on Friday in Marseille, France. The United States will be represented by Treasury Secretary Timothy Geithner and Federal Reserve chairman Ben Bernanke.  

The G7 also includes Britain, Canada, France, Germany, Italy and Japan.

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FINANCE

German watchdog steps up monitoring of popular N26 online bank

Germany's financial watchdog on Wednesday ordered online bank N26 to step up "internal controls and safeguards" to prevent money laundering and terrorist financing, and said it was appointing a special representative to monitor progress.

German watchdog steps up monitoring of popular N26 online bank
An N26 card. Photo: Wikimedia Commons

Bafin’s announcement marks an escalation of previous warnings to the popular Berlin start-up, which has come under fire in the past for not properly verifying the identities of new customers.

“Bafin ordered N26 Bank GmbH to rectify deficiencies both in IT monitoring and in customer due diligence,” the regulator said in a statement.

N26 “is required to ensure that it has the adequate personnel, technical and organisational resources to comply with its obligations under anti-money laundering law,” it said.

A “special commissioner” would oversee the company’s efforts, Bafin added. Founded in 2013 and known for its transparent debit cards, digital bank N26 is one of Germany’s most high-profile financial technology or “fintech” firms and now has seven million customers in 25 countries.

Its rapid growth has rested in part on fast-track identity procedures for new customers.

READ ALSO: What is the digital German bank N26 that’s about to hit a million users?

In 2019, German business weekly WirtschaftsWoche said it had managed to open accounts using forged IDs.

N26 on Wednesday pledged to “work closely” with Bafin and the special representative.

It said it had already significantly increased measures to prevent money laundering in recent years, “but we recognise that more must be done in this area”.

The coronavirus crisis had contributed to a spike in fraudulent online transactions worldwide, N26 added, “increasing the demands placed on banks in the fight against crime”.

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