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Germany’s Federal Financial Supervisory Authority (BaFin) has joined the European Banking Authority (EBA) and the Banca d’Italia in raising the alarm about the use of virtual IBANs for illicit financial transactions.
The regulator has identified virtual IBANs (vIBANs) as an area of significant concern in its Focus 2025 report, warning they could hinder efforts to prevent money laundering.
BaFin confirmed that it is conducting a field study to assess the use of vIBANs in Germany, particularly in high-risk business models, and will introduce targeted supervisory measures based on its findings.
Unlike traditional IBANs, vIBANs replace invoice numbers and payment references. This streamlines transactions, but it also makes it harder to trace the origins and destinations of payments.
According to BaFin, this could complicate customer due diligence and transaction monitoring for banks and payment service providers.
A major risk is that vIBANs can be assigned country codes that do not match the actual account location, potentially misleading customers and regulators.
As the EU prepares to launch its Anti-Money Laundering Authority (AMLA), BaFin is stepping up its oversight.
The regulator has plans for at least 75 special audits across banking and non-banking sectors during 2025, ensuring firms enhance their transaction monitoring and data analysis.
