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FinCrime Frequency – When a Fast-Growing European Digital Bank Was Fined €3.5M for AML/KYC Failures

HomeAll PostsBlogsFinCrime Frequency – When a Fast-Growing European Digital Bank Was Fined €3.5M for AML/KYC Failures

In 2025, a Lithuania-registered challenger bank — let’s call it EuroPay Digital Bank — was fined €3.5 million by its home regulator for serious AML/KYC control weaknesses.

What Happened?

  • During a supervisory review, regulators found that EuroPay Digital Bank failed to properly monitor business relationships and customer transactions.
  • Gaps meant suspicious patterns were not being flagged or escalated.
  • While no confirmed money-laundering was identified, the regulator demanded immediate remediation and imposed a multi-million-euro penalty.

Red Flags That Were Missed

  • Rapid expansion without compliance scaling — onboarding volumes grew faster than monitoring capabilities.
  • Incomplete transaction monitoring — alerts were not always triggered or investigated.
  • Weak lifecycle KYC — customer risk profiles weren’t reviewed as relationships evolved.

The Consequences

  • A €3.5M fine — the largest AML-related sanction faced by the bank.
  • Mandatory remediation and close regulatory oversight of its compliance programme.
  • Public scrutiny of whether digital-only banks can truly keep pace with AML/KYC obligations.

Lessons for Compliance Teams

  • Growth ≠ excuse — regulators expect AML/KYC controls to scale in lockstep with customer and product growth.
  • Ongoing CDD is critical — onboarding is only step one; lifecycle monitoring is where many fintechs fail.
  • Evidence of remediation matters as much as the remediation itself — regulators want clear, documented fixes.

Practical Tips

  • Tune monitoring models for each new product/geography and test against typologies.
  • Increase investigator headcount in line with customer growth.
  • Automate lifecycle KYC triggers (ownership changes, volume spikes, new geographies).
  • Document remediation thoroughly with ownership, testing results, and independent validation.

Takeaway:

This case shows how fast-growing digital banks are under as much scrutiny as traditional players. Strong lifecycle KYC, tuned monitoring, and visible remediation evidence are essential to avoid costly penalties — even if no actual money-laundering is detected.

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