Since June, Hamburg-based BAM Bundesweites Anlagenmanagement – offering students a low-priced all-round carefree blocked account package via Aareal Bank in Wiesbaden – has stopped paying out monthly instalments.
The German government requires students to provide evidence that they can cover their living costs while in the country. It says one way to do this is by opening a blocked account showing sufficient funds for their first year. Before June 1, BAM had paid out 2,021 customers via its accounts, according to the Federal Financial Supervisory Authority, BaFin.
Students took to Reddit to complain that they had not received payments, or help from BAM or the Aareal Bank.
Spiegel reported that more than 180 people affected had joined a group on the messaging platform Telegram. Students from countries including Lebanon, Senegal, the USA and South Korea had calculated that, as of July 15, members of the group had outstanding amounts totalling more than €800,000.
The Federal Association of Foreign Students (BAS) estimates that 200+ students it has been in touch with are owed more than €2 million.
BaFin ordered BAM to “immediately cease unauthorised deposit business” on July 12.
“As far as we know, the funds are safe and can be paid back to the persons concerned”
It said the blocked accounts were illegal as they had not been opened under the name of respective students, but funds were collected by the company in its own account.
As a result, Aareal Bank had not been authorised to make transfers to students without account holders or trustees initiating the payments.
BAS wrote to members on July 22 saying it had “received many calls, phone calls and emails about the frozen BAM blocked accounts”. The organisation has been campaigning for students who have not received money as they should have.
It detailed that BaFin had secured the funds, meaning no money had disappeared.
“As far as we know, the funds are safe and can be paid back to the persons concerned… In the meantime, BAS has been informed that the money will be returned to the students and applicants within the next two weeks by the bank that BAM worked with. The first payments are already being made.”
BaFin has instructed all BAM customers, in Germany and overseas, to open a new blocked account with a “credit institution” approved in Germany.
BAS has written to the Foreign Office, members of the Bundestag, the DAAD and the Deutsche Stiftung Weltbevölkerung.
“Our goal is to ensure that the money is secured and paid out to all those affected. Of course, we also want that such a situation never happens again and that the Federal Foreign Office draws consequences,” it said.
Writing to minister for Foreign Affairs Heiko Maas on July 13, BAS highlighted that BAM was no longer contactable via its website, email or by phone.
“The BAS urges you to make every effort to ensure that funds are paid out to the students immediately. The foreign students have to pay rent, living expenses, etc., and in most circumstances have no further financial reserves,” the letter read.
The organisation also noted that it was not clear to international students that the ministry does not subject designated providers listed on its site to “any critical examination”. It demanded the foreign ministry to only list providers who can guarantee minimum security standards for deposits.
Of the providers listed on the site – BAM is no longer included in the list – only two are banks and therefore subject to state supervision by BaFin, BAS noted.
“All other providers carry out ‘license-free’ financial transactions and in some cases cooperate with foreign banks that are not covered by the state deposit insurance,” it has said. “Many foreign students placed their trust in this overview on an official government website in good faith.”
One twitter user posted that without the foreign ministry website, she would never have found the blocked account provider BAM, while others have shared issues they are facing via the #BAMgate and #IgotBAMmed hashtags.
Providers of blocked accounts are listed on the foreign ministry website “to support students in their search for corresponding providers”, an official source in the foreign ministry told The PIE News.
“This listing does not constitute a legal assessment nor does the federal foreign office recommend or advise against any providers. Providers are listed alphabetically and the listing is open to all providers offering blocked accounts for foreign students,” they said.
“The provider mentioned was deleted from the list, as it no longer offers such services”
“The provider mentioned was deleted from the list, as it no longer offers such services.”
Additionally, BAS noted that it was already aware of cases at the German embassy in Turkey where the authorities were no longer accepts a blocked account with BAM as proof of financing, and called for students in the process of applying for study visas not to suffer any disadvantages from the fallout.
“That the federal foreign office has now removed the fraudulent provider from the site doesn’t make it any better,” said Dharshan Barkur, advisor for international students on the TU Dresden’s student council.
“We are already receiving the first bad news from prospective students, who are still in the visa process and have already entrusted their money to BAM. The embassies are now rejecting blocked accounts from BAM as proof of funding. Where should those affected get the money from now? The situation is grotesque.”
BAS has an exchange group for those students affected, and students can contact BAS by email: email@example.com.