US hits Germany’s biggest bank with $186 million fine

Lazy eyes listen


The US Federal Reserve announced on Wednesday that it has penalized Deutsche Bank and its US affiliates $186 million for failing to resolve money laundering control issues previously identified by the US regulator.

The Fed previously fined the bank in 2015 and 2017 for the same violations, which stemmed from poor controls in Deutsche’s relationship with Danske Bank’s Estonian branch.

“Deutsche Bank made insufficient remedial progress” in complying with those requirements, to which it had consented, the Fed said in its latest statement, while issuing a new order forcing Deutsche “to prioritize completion” of the controls it was required to put in place under the previous orders.

Bank regulators discovered that Deutsche did not properly monitor transactions involving high-risk customers in its dealings with Danske Bank. The Fed stated that a “significant portion” of the $276 billion in transactions processed by Deutsche for Danske comprised “high-risk non-resident customers.” The Fed claimed that deficiencies in Deutsche’s anti-money laundering practices existed after the bank’s relationship with Danske ended in 2015.

Danske, Denmark’s largest bank, pled guilty last year to charges stemming from a long-running money-laundering probe and agreed to pay a $2 billion fine.

On Wednesday, Deutsche said it was committed to fixing the deficiencies identified by the Fed in the “near future,” and that the fine was mainly covered by provisions taken in previous quarters.

“We believe we are well positioned to meet our regulators’ expectations,” stated the German bank.

The bank has “significantly invested in controls” since 2019, according to the statement, and has raised the size of its worldwide anti-financial crime team by more than 25%, to over 2,000 workers.

Regulators have been putting pressure on Germany’s largest bank in recent years due to compliance failures. In 2021, Deutsche agreed to pay $125 million to avoid prosecution on charges of precious metals market manipulation and foreign bribery.

In November, Germany’s financial watchdog BaFin asked the scandal-plagued Deutsche to strengthen money-laundering measures.