(Bloomberg) -- Germany’s financial watchdog is lifting a three-year-old cap on the number of customers N26 Bank AG can take on after the fintech worked to improve its financial crime and anti-money laundering controls.

BaFin, which had been restricting N26 to taking on just 60,000 new customers a month, is scrapping that limit starting June 1, according to a statement from N26. The move will pave the way for the German neobank to better compete with the likes of Revolut and Bunq for customers. 

The Berlin-based fintech said it had invested more than €100 million ($109 million) in compliance, infrastructure, and staffing in recent years as it sought to improve its systems dedicated to combating money laundering.

“It’s really about using machine learning systems to sharpen our transaction monitoring,” Maximilian Tayenthal, co-chief executive officer and chief operating officer of N26, said in an interview. 

N26 has been in a period of close exchange with BaFin and that exchange will continue until the end of this year, meaning BaFin continues to keep a close eye on the neobank and can re-impose restrictions if it deems them necessary.

Read more: BaFin Mulls Lifting Cap on N26’s Growth After €9.2 Million Fine

Tayenthal said the fintech’s compliance systems are ready to handle double the number of customers in the next 12 months. The firm has previously said it has roughly 4 million customers across 24 markets and about €7.2 billion in deposits.

For years, BaFin has been cracking down on startup banks and payment firms, pressuring them to improve their internal controls. With many firms beginning to show progress on those efforts, the regulator’s top anti-money laundering official has previously said the clampdown was set to relax.

But BaFin’s latest move comes just days after it levied a €9.2 million ($10 million) penalty on N26, one of its biggest fines to date, after it found the fintech was delayed in submitting reports of suspected money laundering on its systems in 2022. N26 said it had already set aside provisions to cover that fine. 

The removal of the cap marks an end to a saga that first began in 2021, when BaFin began limiting the number of customers that N26 was permitted to take on to 50,000 per month. The regulator loosened the cap to 60,000 last year.

The mobile bank in recent years has said it’s looking to refocus on its European operations and announced in November it would end a pilot project in Brazil and leave the market. The firm now expects to reach monthly profitability in the second half of 2024, according to Tuesday’s statement.

--With assistance from Steven Arons.

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