Financial service provider recently stopped monthly payments. Those affected will not get their money for an unforeseeable period of time.

Many foreign students are currently in turmoil: they have entrusted their money, which is earmarked for the first year of their stay, to the financial service provider “BAM Bundesweites Anlagenmanagement” in good faith. But now they are denied access to their own money. The company stopped monthly payments from the so-called blocked account in June. Holders of a visa for job-seeking are also affected. Now the scam has been exposed: BaFin has ordered the unauthorised deposit business to be wound up. The accounts were not set up in the name of the foreign students. This puts those affected in an awkward and existence-threatening situation, because they don’t know how they are supposed to make ends meet over the next few months, and above all when they will get their money. There is still no solution in sight.

“We are currently receiving new desperate enquiries from those affected almost every day. There is simply no end to it. The foreign students are in great distress and rightly feel cheated,” says Malú Ortega Méndez, AStA officer for international students at the University of Mainz, describing the situation. Out of their distress, the students have joined forces on social networks and contacted official bodies such as the BaFin, the Foreign Office, the police and, last but not least, the Federal Association of Foreign Students. In the meantime, the group has grown to well over 200 people. According to estimates, their deposits alone total more than 2 million euros. “I don’t know how I’m going to survive the next month because I transferred all my savings to the BAM account in good faith,” complains Sara S.* from Iran, one of the hundreds of people affected. “I feel ripped off, as do many of my colleagues.”

The Federal Association of Foreign Students clearly sees official failure in the current case. On its pages, the Foreign Office refers to various financial service providers that offer blocked accounts. Only two of these providers are banks and are therefore subject to state supervision by BaFin. All other providers engage in “permission-free” financial transactions and in some cases cooperate with foreign banks that are not subject to state deposit insurance. Many foreign students relied in good faith on this overview on an official state site.

“It is unacceptable that the Foreign Office refers to financial service providers without taking a close look at the offers,” outraged Fabian de Planque, financial officer of the Federal Association of Foreign Students (BAS). “The height of audacity is that most of these service providers claim to be officially recognised by the government, including BAM. This borders on fraudulent deception.” The Foreign Office denies any responsibility. In the view of BAS, this is irresponsible. “The fact that the Foreign Office has now removed the fraudulent provider from the site does not make it any better,” adds Dharshan Barkur, international students’ officer of the TU Dresden student council. “We are already receiving the first bad news from prospective students who are still in the visa issuing process and have already entrusted their money to BAM. The embassies are now rejecting blocked accounts from BAM as proof of funding. Where are the people concerned supposed to get the money from now? The situation is grotesque.” Viviana Camila A.* from Colombia, one of the affected people who still has the appointment at the embassy, describes her situation as follows: “I feel like the ground has been pulled out from under me. The bad thing is that I am facing nothing right now. The embassy ignores my requests. How do I get my money now? I am now having sleepless nights thanks to BAM.” Another affected person outlines the mood like this: “Not only our performance in studies, but also our mental health suffers extremely from the unexpected financial hardship. We feel let down because the provider even advertised recognition by the Foreign Office, which was not true. On top of the stress of exams, I now have to worry about my funding. It is one big nightmare.” In a letter to the Foreign Office, the Federal Association of Foreign Students now expresses its concern about the situation.

In another letter, the association, which represents the interests of foreign students nationwide, is now demanding rapid assistance from the German Academic Exchange Service (DAAD) and the German Student Union (DSW), as it is uncertain when those affected will see their money again. In the view of the BAS, the legislator must make adjustments here to ensure that only reputable providers are allowed to operate in the blocked account business and that these businesses are subject to state supervision. “This also ensures that the deposits are directly secured for the benefit of the creditors, the foreign students,” explains de Planque. “I get the impression that those responsible wanted to make a quick buck on the back of a supposedly vulnerable, defenceless group, the foreign students. It is also possible that we are dealing with insolvency fraud.”

In principle, the Federal Association of Foreign Students rejects the common practice of blocked accounts. Nadia Galina, speaker of the BAS, explains: “Blocking accounts are nothing more than coercion of foreign students. They are adults who can be expected to manage their money independently and responsibly. And many of them mistakenly think that this is required by law.” The only legal requirement, however, is proof of subsistence. BAS is also critical of this provision. “In practice, proof of funding leads to the foreigners authorities de facto wanting to see a blocked account. However, this is not the only way to prove that one’s livelihood is secured,” explains Johannes Glembek, managing director of BAS. “We see proof of funding as a relic from days long gone, when the now politically declared goal of attracting skilled workers was not yet an issue.”

* Persons are known to BAS by name and are in contact. Contact can be made with those concerned if required.

Background:
To apply for their visa, German authorities require international students from non-EU countries to prove that they have the annual amount of the BAföG maximum rate (currently 10,332 EUR) to finance their living expenses. A frequently chosen option is the blocked account, from which one twelfth of the annual amount is available to the creditor each month.