Federal Financial Supervisory Authority

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Federal Financial Supervisory Authority
- BaFin -

logo
State level Federation
legal form Institute of public right
Supervisory authority Federal Ministry of Finance
founding May 1, 2002
Headquarters Bonn and Frankfurt am Main , GermanyGermanyGermany 
Authority management Felix Hufeld , President
Servants around 2700
Web presence bafin.de
BaFin building in Bonn

The Federal Financial Supervisory Authority ( short: BaFin ), is an independent German public institution of the Federal with headquarters in Frankfurt and Bonn . It is subject to the legal and technical supervision of the Federal Ministry of Finance .

As the financial market supervisory authority, BaFin supervises and controls all areas of finance in Germany within the framework of financial supervision . With the creation of the uniform European banking supervisory mechanism within the framework of the European banking union , BaFin handed over the supervision of important large banks to the European Central Bank in November 2014 .

Establishment

BaFin was due to the Financial Act on 1 May 2002 established by merging the federal supervisory offices for (BAKred) , for securities trading and Insurance . By merging the three supervisory offices, overlapping competencies and supervisory gaps should be eliminated. With the uniform supervision, the interdependencies on the national and international capital markets and the associated risks should be better recorded and made manageable. In this way, BaFin is intended to contribute to Germany's stability and competitiveness as a financial center . In addition to the tasks of the predecessor institutions, other tasks can be assigned to BaFin, for example advising other states on setting up national authorities similar to BaFin.

organization

The authority is headed by a board of directors consisting of the President Felix Hufeld and Elisabeth Roegele ( securities supervision division ), Raimund Röseler ( banking supervision division ), Frank Grund (insurance supervision division), Béatrice Freiwald (internal administration and law) and Thorsten Pötzsch (settlement division ) consists.

In addition to the specialist areas, the so-called operational pillars, there are departments at BaFin that do not directly control the market, but perform cross-sectoral or organizational and administrative tasks, such as risk modeling , money laundering and international tasks . The press and information department, internal auditing , the analysis & strategy department and the presidential office report directly to the president.

BaFin and its approximately 2,700 employees are fully financed by fees that are levied for administrative activities and by the annual allocation of the other costs to the supervised institutes and companies; it is therefore independent of the federal budget . A complaint to the Federal Constitutional Court regarding the constitutionality of the (compulsory) levy was rejected as unfounded in 2009. According to the court, the levy is intended to “ strengthen investors' confidence in the solidity and integrity of these companies as a necessary framework for a functioning financial market”.

In 2016, BaFin supervised around 1,665 German credit institutions , 47 housing companies with savings facilities, 700 financial services institutions , 40 payment and e-money institutions , 90 German branches of foreign institutions, 555 insurance companies , 29 pension funds and 260 capital management companies and more than 6,100 domestic funds. With the start of the SSM at the beginning of November 2014, the ECB in Germany has direct supervision of around 20 groups classified as significant. Direct supervision of around 3,600 insignificant institutions in the euro area will initially remain with the respective national supervisory authorities of the member states; these include around 1,630 German institutes that are still subject to direct supervision by BaFin.

tasks

The main task is the supervision of banks, insurance companies and trading in securities in Germany. This is to ensure the functionality, integrity and stability of the German financial system. As a (financial) market-oriented institution, BaFin is responsible for providers and consumers. On the supply side, it pays attention to the solvency of banks, insurance companies and financial services institutions. For investors, bank customers and insured persons, it ensures confidence in the financial markets and the companies operating in them.

It is also responsible for preventing the financial system from being misused for money laundering and terrorist financing purposes. For example, BaFin ensures that the institutions it supervises comply with the applicable requirements for the prevention of money laundering and terrorist financing.

Another task is collective consumer protection, which extends to all financial products and financial services with which BaFin is supervised. The aim is to protect consumers as a whole, for example by creating a more transparent and understandable range of financial and insurance products and financial services.

Account supervision

In order to maintain the integrity and stability of the financial system, in particular to combat money laundering , credit institutions are obliged under Section 24c KWG to maintain an automated retrieval system for account master data with which BaFin can access customer data at any time. The banks themselves or affected customers do not find out about an account retrieval .

Banking supervision

The central legal basis for banking supervision is the Banking Act . BaFin monitors compliance with the rules and requirements of the KWG with regard to credit and financial institutions during the “start-up” and as “ongoing supervision”.

The start-up of banks in Germany is subject to a statutory right of reservation of permission, i.e. anyone who wants to offer banking or financial services needs approval from BaFin as the competent authority. The prerequisites for this are, among other things, minimum capital requirements, reliability of the management, solid bank management and the viability of the business plan .

Financial institutions are subject to ongoing supervision by BaFin for the entire duration of their business activity. This is essentially intended to ensure that the prerequisites necessary for the foundation are not "softened" later. In particular, the financial situation in accordance with the Solvency Regulation (SolvV) and the Liquidity Regulation (LiqV) as well as the proper organization including suitable risk control and management systems ( MaRisk ) are monitored. The reliability of the management is ensured by the fact that appointments to the board of directors are checked by BaFin.

In addition to the annual financial statements , BaFin also receives information about the financial institutions from audit reports from auditors or banking associations. In addition, the banks and financial service providers submit monthly short balance sheets and reports on large loans and loans in the millions. Compliance with the Liquidity Ordinance and Solvency Ordinance must also be verified on a regular basis.

All information is evaluated and assessed in close cooperation with the Deutsche Bundesbank . In addition, BaFin can order special audits, which are also carried out on site by Bundesbank employees.

For penal and sanctioning purposes, the KWG provides BaFin with an extensive range of sanctions, ranging from written warnings and fines to the withdrawal of the banking license .

BaFin apparently kept an internal list to assess the risks in relation to the banks affected by the financial crisis from 2007 , which was made public at the end of April 2009.

Bank settlement

If the threat to the continued existence of an institution cannot be averted with supervisory means and financial stability is jeopardized, BaFin, as the national resolution authority, also has extensive powers to intervene. This means that it can wind up an institution within the scope of its responsibility without endangering the stability of the financial market.

Insurance supervision

As with banking supervision, BaFin monitors insurance companies on the basis of the Insurance Supervision Act as part of insurance supervision . Insurance companies also require the approval of BaFin to commence and maintain their business activities; the requirements essentially correspond to those of banking supervision . Primary insurance companies , reinsurance companies , holding companies as well as security and pension funds are subject to supervision . This does not apply to insurers that only operate in a single federal state . These are subject to the supervision of the competent state supervisory authority.

The supervision includes in particular the monitoring of the coverage of the liabilities towards the policyholders by the guarantee assets and the solvency in order to guarantee the fulfillment of the concluded contracts. In the case of life insurance, the actuarial reserve is also monitored. In addition, BaFin generally monitors compliance with all laws that apply to the operation of insurance business.

Securities supervision

The aim and purpose of the work of the third pillar of BaFin is to ensure the functionality of the German markets for securities and derivatives in accordance with the Securities Trading Act . This includes, in particular, the prevention of insider trading and other cases of abuse. The banks report to BaFin all purchases and sales of securities, as well as every ad hoc report from listed companies. This information forms an essential basis for tracking price and market price manipulation. In particular, proprietary transactions by executives are observed.

BaFin's options for intervening in market events range from summoning and questioning people, suspending or banning trading in financial instruments (securities, etc.) to the obligation to report certain suspicious facts to the public prosecutor. BaFin is expressly entitled to transmit personal data from suspects and possible witnesses, insofar as this is necessary for criminal prosecution.

In addition, BaFin monitors the notifications and publication obligations of significant shares of voting rights required by market transparency regulations and has been monitoring takeovers of listed companies on the basis of the Securities Acquisition and Takeover Act since 2002 .

In addition to these active tasks, BaFin is the central depository for sales prospectuses . BaFin only checks these stored prospectuses for formal correctness, but not for correctness of the content; the creditworthiness of the issuer is also not checked.

On September 19, 2008 , BaFin announced, as a reaction to the increasingly threatening proportions on the stock exchanges worldwide as a result of the financial crisis , short sales of eleven German financial stocks from September 20, 2008, 00:00 to December 31 2008, midnight. This measure was last extended until May 31, 2009. Similar measures have also been announced in the US and UK. This measure in accordance with Section 6 (1) WpHG was taken for shares in the following financial service providers: Aareal Bank AG , Allianz SE , AMB Generali Holding AG , Commerzbank AG , Deutsche Bank AG , Deutsche Börse AG , Deutsche Postbank AG , Hannover Re , Hypo Real Estate Holding AG , MLP AG and Munich Re . Today, BaFin has express authorization to take such measures under Section 14 (1) of the WpHG.

For the period from May 19, 2010 to March 31, 2011, the banking supervisory authority again prohibited uncovered short sales of government bonds from the euro zone and 10 companies in the German financial sector in order to support the stability of the entire financial system.

Role in law enforcement

BaFin is entitled, and in some cases even obliged, to report to the law enforcement authorities any facts it has ascertained in the course of supervision that justify a suspicion of a criminal offense (in particular insider offenses, market manipulation , unauthorized banking, capital investment fraud , inducement to speculate on the stock market) . Accordingly, it sees itself as a kind of law enforcement agency. The 2004 annual report (p. 83) says: "Together with the Deutsche Bundesbank, the police authorities and the public prosecutor's offices, BaFin is pursuing unauthorized transactions [...]." Since BaFin also forwards such data and facts to the law enforcement authorities according to the rules of Criminal Procedure Code do not have authorized access, there will be friction between German supervisory law and criminal procedural principles. The legislature counteracts this problem at least partially by creating the right to refuse or introducing investigation hurdles (e.g. Section 44c KWG , according to which BaFin may only carry out certain investigations if there is initial suspicion of a criminal offense). Basically, it can be assumed that the results of the BaFin investigation will be passed on to the law enforcement authorities.

According to information from the Süddeutsche Zeitung, the authority has initiated special audits against four German banks on suspicion of manipulating the Euribor reference interest rate , and WestLB is also being investigated in connection with the Libor interest rate .

Legal and technical supervision

BaFin exercises after the Deposit Guarantee and Investor Compensation Act , the legal and technical supervision over the compensation schemes from. These include the compensation scheme of the securities trading company , the compensation scheme of the Federal Association of Public Banks in Germany and the compensation scheme of German banks .

Consumer complaints

Every private person has the right to complain about the companies supervised by BaFin. Such complaints are legally petitions. They are free of charge for consumers. A rejection of the complaint by BaFin has no negative consequences or costs for the complainant. The complaint statistics are published annually by BaFin. Complaints can be submitted in writing or online. It is recommended that you contact the relevant credit institution in writing before making a complaint. BaFin does not provide legal advice and does not intervene in ongoing legal proceedings. However, with every complaint, it checks whether supervisory measures are necessary or whether there is a violation of applicable legal provisions. If this is not the case, the complainant will be informed. Otherwise, BaFin will not inform the complainant of the result of the examination due to the statutory obligation of confidentiality .

Complaints about investment advice must be reported by the banks to BaFin and are stored there in the adviser register.

Company database

BaFin maintains a company database, which is also publicly accessible, in which all banks, financial service providers, capital investment companies, insurers or pension funds are listed that have written permission, are notified or have a representative office in Germany. Companies are listed, their numerical ID, the license type, the license date, the type of company and, if available, the responsible arbitration board .

criticism

In March 2004, the Federal Examination Office of Koblenz determined that BaFin's internal control system was inadequate. For 2006, the Federal Audit Office uncovered the embezzlement of over 4 million euros by a senior government director of the agency, who was then indicted and convicted by the Bonn district court. In the reasons for the judgment, the BaFin was criticized for the "non-existent" control system.

In September 2006, an expert opinion by PricewaterhouseCoopers and the internal auditing department of BaFin showed that the federal government's guidelines for preventing corruption had not been implemented. In April 2008, the decision-making structures of BaFin were changed and a board of directors was set up, which has since headed BaFin together with the President. In addition to Jochen Sanio, the management board included four executive directors - with the following responsibilities: Sabine Lautenschläger-Peiter , who had previously been the head of the major banks department, was responsible for all banking supervision. Thomas Steffen remained in charge of insurance supervision until the end of 2010. Karl-Burkhard Caspari took over the securities supervision. Michael Sell became Executive Director for Cross-Sectional Tasks / Internal Administration . Most recently, he was group leader for tax policy in the Federal Chancellery.

In 2015, several experts in the finance committee of the German Bundestag criticized structural deficiencies in relation to timely intervention and advance warning of problematic financial products. A social science analysis of the time dimension of BaFin's activities showed that, on the one hand, it is in a position to increase the time budget for political decision-making and to stabilize the financial market in the long term, but on the other hand, it extends bureaucratic chains of action and has considerable tempo deficits. With the Small Investor Protection Act in 2015, an independent “financial market watchdog” was initiated at the Federation of German Consumer Organizations (vzbv) in order to protect faster and earlier against undesirable developments and dubious offers on the financial market.

BaFin was massively criticized in connection with the accounting scandal and Wirecard's bankruptcy application in early summer 2020. "You did not do enough research and trusted the management of Wirecard [too much]." On June 22, 2020, the President of BaFin Felix Hufeld admitted that his authority had made very serious mistakes in this connection.

literature

  • André-M. Szesny: Financial Market Authority and Criminal Procedure. The investigative competencies of BaFin and the stock exchange supervisory authorities according to the Banking Act, Securities Trading Act and Stock Exchange Act and their relation to criminal procedure law (=  series of publications on criminal law in research and practice . Volume 130 ). Kovač, Hamburg 2008, ISBN 978-3-8300-3622-7 ( table of contents - zugl .: Osnabrück, Univ., Diss., 2007).

Web links

Commons : Federal Financial Supervisory Authority  - collection of images, videos and audio files

Individual evidence

  1. ↑ a b BaFin introduces itself. BaFin, January 1, 2018, accessed on January 10, 2018 (brochure).
  2. ↑ to finance include banks , financial services institutions , insurance companies and securities trading companies
  3. ↑ Single Banking Supervision Mechanism - SSM. Retrieved March 9, 2019 .
  4. ↑ Law on the Federal Financial Supervisory Authority (Finanzdienstleistungsaufsichtsgesetz)
  5. ↑ Head of BaFin. BaFin, January 8, 2018, accessed on January 8, 2018 .
  6. ↑ Federal Constitutional Court, 2nd Senate: Federal Constitutional Court - Decisions - The levy for financing the Federal Financial Supervisory Authority in the supervisory areas of credit and financial services and securities trading does not violate Art. 12 Para. 1 GG in conjunction with Art. 105 GG and Art. 110 GG nor Art 3 Paragraph 1 GG - Compliance with the financial constitutional requirements for special charges with a financing function . September 16, 2009.
  7. ↑ Federal Financial Supervisory Authority: credit institutions under BaFin or ECB supervision. Retrieved January 8, 2018 .
  8. ↑ Federal Financial Supervisory Authority: Brochure: BaFin introduces itself. Federal Financial Supervisory Authority, accessed on January 8, 2018 .
  9. ↑ The start of the banking union - the single supervisory mechanism in Europe. (PDF) In: Monthly Report October 2014. Deutsche Bundesbank, October 20, 2014, p. 48 , accessed on February 9, 2015 .
  10. ↑ Banking Act
  11. ↑ BaFin list: 816 billion euros in credit risks. In: welt.de . April 26, 2009. Retrieved December 19, 2014 .
  12. ↑ Processing. (No longer available online.) Federal Financial Supervisory Authority, archived from the original on January 6, 2018 .;
  13. ↑ Insurance Supervision Act
  14. ↑ Law on Securities Trading (Securities Trading Act)
  15. ↑ Securities Acquisition and Takeover Act
  16. ↑ The Securities Prospectus Act stipulates that a prospectus must be published for securities that are publicly offered in Germany.
  17. ↑ dpa-AFX BaFin prohibits high-risk bets on euro government bonds , May 18, 2010.
  18. ^ Andrea Rexer: Bafin: special tests at Deutsche Bank and Portigon. In: sueddeutsche.de . January 28, 2013, accessed December 11, 2015 .
  19. ↑ a b Complaints & contact persons. BaFin, accessed on December 11, 2015 .
  20. ↑ BaFin-Bei der BaFin complain [1] accessed on August 27, 2018
  21. ↑ BaFin: BaFin - BaFin company database .
  22. ↑ Handelsblatt, September 14, 2006, p. 25
  23. ^ BaFin scandal Prosecutor calls for six and a half years in prison Der Spiegel June 25, 2007.
  24. ^ BaFin million fraud: six years imprisonment. wdr.de, archived from the original on June 14, 2011 ; accessed on December 11, 2015 .
  25. ↑ Handelsblatt, September 14, 2006, p. 24 f.
  26. ↑ Organization statute for the Federal Financial Supervisory Authority (OsBaFin). (No longer available online.) June 9, 2008, archived from the original on December 22, 2015 ; Retrieved December 11, 2015 (last amended December 19, 2012).
  27. ↑ Head of BaFin. (No longer available online.) BaFin, December 1, 2015, archived from the original on December 15, 2015 ; accessed on December 11, 2015 .
  28. ↑ Sonia Shinde and Hans G. Nagl: Schwungvoll ins Irgendwo. In: handelsblatt.com . January 16, 2008, accessed December 11, 2015 .
  29. ^ Tagesschau April 18, 2008: Financial supervision with new management. Sanio no longer alone at the top of BaFin (tagesschau.de archive)
  30. ↑ Jörn Poppelbaum: New top of the Bundesbank: BaFin director becomes vice. JUVE.de, February 11, 2011, accessed on June 29, 2020 .
  31. ^ Sabine Lautenschläger-Peiter. News. In : wirtschaft.com. KHT Media GmbH, accessed on June 29, 2020 .
  32. ↑ Dr. Thomas Steffen. (PDF) CV. Law Faculty - University of Bonn, August 19, 2019, accessed on June 29, 2020 .
  33. ↑ Long-standing BaFin Executive Director Karl-Burkhard Caspari: "With one crying and one smiling eye". BaFin, April 15, 2015, accessed on June 29, 2020 .
  34. ↑ Short bio Michael Sell . Archived from the original on September 28, 2011.
  35. ↑ German Bundestag: Protocol No. 18/37 of the meeting of the Finance Committee of the German Bundestag . March 16, 2015, p. 26–29, 33–209 ( bundestag.de [PDF; 9.5 MB ; accessed on July 14, 2020]).
  36. ↑ Ulf Bohmann, Henning Laux: Finanzmarktwächter. About the synchronization of politics and economy. In: Berlin Journal for Sociology . tape 27 , no. 1 , 2017, p. 35–63, here: 59 f ., doi : 10.1007 / s11609-017-0334-6 ( rdcu.be ).
  37. ↑ BaFin and the Wirecard scandal - only one employee to check. In: Tagesschau. ARD, June 28, 2020, accessed on June 29, 2020 .
  38. ↑ Hanno Mußler: Bafin boss on Wirecard: "A shame for Germany" . In: Frankfurter Allgemeine Zeitung . June 22, 2020 ( faz.net [accessed July 22, 2020]).