On Wednesday, the US Federal Reserve said it had fined Germany’s Deutsche Bank, as well as its US affiliates $186 million due to failures to address money laundering control issues which had previously been flagged my the US regulator.
Previously, in 2015 and 2017 the Federal Reserve had fined the bank over the exact same issues, albeit there the issues arose from Deutsche’s relationship with Danske Bank’s Estonian branch.
In its latest statement, the Fed said, “Deutsche Bank made insufficient remedial progress” in complying with the previous orders which it had consented to. The Fed also issued a new order which would require Deutsche “to prioritize completion” of the controls it should have put in place in response to the earlier orders.
Regulators found that Deutsche had not properly monitored transactions involving high risk customers in its dealings with Danske Bank. The Fed noted a “significant portion” of the $276 billion in transactions which Deutsche cleared for Danske were performed for “high-risk non-resident customers.” The Fed noted that Deutsche’s lax policies on money laundering persisted even after it had ended its relationship with Danske Bank in 2015.
Last year Danske Bank, Denmark’s largest bank, agreed to pay a $2 billion penalty after pleading guilty to charges brought against it following a long-running money laundering investigation.
On Wednesday, Deutsche Bank said that is would address the failures identified by the Fed in the “near future,” adding that the fine would be mostly covered by provisions it had taken in over previous quarters.
In the statement, the lender said, “We believe we are well positioned to meet our regulators’ expectations.”
The statement noted that the ban has, “significantly invested in controls” going back to 2019, as it has enlarged its global anti-financial crime unit by over 25% to more than 2,000 workers.
However the bank has been under increasing pressure from regulators over compliance failings in recent years. Deutsche had agreed to pay $125 million in 2021 to avoid prosecution over charges that it had engaged in foreign bribery schemes and manipulated precious metals markets.
BaFin, the German financial watchdog had also urged Deutsche to strengthen its money laundering controls in November.
