The Federal Financial Supervisory Authority (BaFin) can compel Internet Service Providers to implement DNS blocking when companies provide financial services without authorization. The Administrative Court of Frankfurt/Main (VG Frankfurt) upheld this power in a ruling dated October 23, 2024 (Case No. 7 K 800/22.F).
The case revolved around an order issued by BaFin to a major global ISP, mandating a DNS block on the domain future-traders.com, operated by the Netherlands-based Future Traders Corporation Ltd. BaFin had previously determined that the company was illegally offering financial services without the required licensing under German law (§ 32 KWG). Additionally, the company engaged in fraudulent practices, including forging BaFin documents and misrepresenting other entities.
The court ruled that, under § 37 KWG, BaFin holds the authority to issue such orders if proportionality is maintained. However, in this instance, the court found that BaFin failed to exhaust alternative measures, such as targeting the hosting provider, which could have been more effective in addressing the violations. The ruling emphasizes that DNS blocking should only be a last resort (“ultima ratio”).
BaFin’s decision to compel DNS blocking was overturned, although the court acknowledged the legal framework allows for such measures. The case is expected to proceed to appeal due to its broader implications for internet regulation and fundamental rights.
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