The US Federal Reserve has imposed a fine of $186 million on Deutsche Bank and its US affiliates for their failure to adequately address money laundering control issues. This penalty comes after the regulator had previously flagged the same issues and fined the bank in 2015 and 2017. The problems were identified in Deutsche Bank’s relationship with the Estonian branch of Danske Bank.
The Federal Reserve stated in its latest statement that Deutsche Bank had made insufficient progress in complying with the previous orders, which it had consented to. Therefore, the regulator issued a new order requiring the bank to prioritize the completion of the controls that it was supposed to put in place under the earlier orders.
The bank regulators found that Deutsche Bank had not properly monitored transactions involving high-risk customers in its dealings with Danske Bank. According to the Federal Reserve, a significant portion of the $276 billion in transactions that Deutsche Bank cleared for Danske Bank involved high-risk non-resident customers. The shortcomings in Deutsche Bank’s policies on money laundering persisted even after its relationship with Danske Bank ended in 2015.
Last year, Danske Bank, the largest bank in Denmark, pleaded guilty to charges resulting from a long-running money-laundering investigation and agreed to pay a $2 billion penalty.
Deutsche Bank responded to the fine by stating its commitment to addressing the identified shortcomings in the near future. The bank also noted that the fine was largely covered by provisions taken in prior quarters. It expressed confidence in meeting the expectations of regulators.
Deutsche Bank stated that it had significantly invested in controls since 2019 and had increased the size of its global anti-financial crime team by more than 25%, employing over 2,000 people. However, the bank has faced pressure from regulators in recent years over compliance failings. In 2021, Deutsche Bank agreed to pay $125 million to avoid prosecution on charges of manipulating precious metals markets and engaging in foreign bribery schemes. Germany’s financial watchdog BaFin has also urged the scandal-hit bank to improve its money laundering controls.
In conclusion, Deutsche Bank and its US affiliates have been fined $186 million by the US Federal Reserve for failing to address money laundering control issues. The bank had previously been fined for the same issues in 2015 and 2017. The Federal Reserve has ordered Deutsche Bank to prioritize the completion of the necessary controls. Deutsche Bank has committed to addressing the identified shortcomings and has made significant investments in controls since 2019. It remains under scrutiny from regulators and has faced other legal issues, including charges of manipulating markets and engaging in bribery schemes. The bank’s compliance with money laundering controls has been a particular area of concern, and Germany’s financial watchdog has urged improvements in this regard.