German Federal Financial Supervisory Authority

The Federal Financial Supervisory Authority, also referred to as BaFin, is the financial regulatory body in Germany. BaFin is an independent institution that is supervised by the German Federal Ministry of Finance, with their headquarters in Bonn and Frankfurt.

BaFin explained

The Federal Financial Supervisory Authority was formed after the Financial Services and Integration Act in 2002. The main purpose of this act was to establish an integrated financial regulator that would oversee all financial activities. BaFin supervises the following; banks, credit institutions, insurance companies, financial service companies, brokers and stock exchanges.

The main duties of BaFin include the following, however this list is not exhaustive;

  • Supervision of accounts: maintaining a stable financial sector and preventing money laundering in Germany.
  • Banking: issuing bank licenses under the German Banking Act and ensuring that all banking institutions are in compliance with the law. All financial institutions are required to provide their financial audits and statements to BaFin. Additionally, financial institutions must provide monthly reports and details of retail loans to BaFin in order to be standardized and regulated.
  • Insurance: under the Insurance Supervision Law all insurance entities are required to maintain and receive approval from BaFin in order to operate as legal financial institutions.

In order to establish a financial institution in Germany, it is vital to comply with the legal requirements and restrictions outlined by BaFin. All applications for a German bank license are to be made to BaFin, which is the financial authority that can grant or decline the application.

The procedure of acquiring a German banking license is long and complex thus it is advised to seek the assistance of a professional consultancy firm in order to complete this process in a professional and timely manner.