Explained: The BaFin

The BaFin (the Federal Financial Supervisory Authority) is Germany’s national regulator for banks, insurance companies, and financial markets. Its objective is to ensure the proper functioning, stability and integrity of Germany’s financial system. The BaFin operates several different functions to meet this objective.

Regarding its banking supervisory responsibilities, the BaFin supervises banks, financial services institutions, payment institutions, insurers and other financial institutions. Its primary objectives are to work to prevent irregularities in the banking system which (1) endanger the safety of the assets entrusted to institutions, (2) adversely affect the orderly execution of banking transactions, or (3) substantially prejudice the economy as a whole.

Regarding its insurance supervision, its primary objective is the protection of policyholders and beneficiaries. It works to ensure that the interests of the insured are adequately safeguarded, that the obligations under insurance contracts can be fulfilled at all times, and that the business operations are properly conducted and statutory provisions are met.

Under its securities supervision, the BaFin seeks to prevent insider dealing and market manipulation, monitor publications of ad-hoc disclosures, managers’ transactions reports and notifications of major holdings of voting rights, supervise company takeovers and enforce financial reporting.

The BaFin is also the German anti-money laundering authority. In this capacity, the BaFin seeks to prevent any misuse of the financial system for the purposes of money laundering, terrorist financing and fraudulent activities. It also ensures that the institutions and insurance undertakings under its supervision fulfil their obligations under money laundering legislation.

The BaFin is also Germany’s national resolution authority as defined in the European Single Resolution Mechanism Regulation.