In recent weeks, lenders have been unable to address persistent shortcomings in the management of the fight against money laundering, according to people familiar with the matter.
The Fed’s frustration has escalated to the point of amending the banks, according to people familiar with the matter.
Deutsche Bank has invested huge sums of money to address repeated loopholes and penalties associated with authorizing suspicious transactions. The Fed told Deutsche Bank that German lenders, who have a strong presence on Wall Street, are backing down instead of going forward. Regulators say some of the anti-money laundering issues require immediate attention, according to people familiar with the matter.
A spokeswoman for Deutsche Bank said Deutsche Bank would not comment on the dialogue with regulators. A Fed spokeswoman declined to comment.
The Federal Reserve Board’s harsh words contrast with the bank’s message that they have worked diligently to improve the system and have caused most legal problems in the past.
The Fed’s latest warning was an unusual criticism for big banks four years after Deutsche Bank’s US operations were called “difficult.” In May 2020, he issued a new warning on the bank’s handling of money laundering.
In 2020, Deutsche Bank will properly deal with one of the biggest money laundering scandals in Europe, the bank’s correspondent bank and Jeffrey Epstein, a sex criminal convicted by a deceased financier. Reconciled with New York State Department of Financial Services for non-follow-up.
In 2017, the Fed fined Deutsche Bank $ 41 million for failing to maintain an effective anti-money laundering program.
Deutsche Bank is Germany’s largest lender and a major player in global financial transactions as a Fed-regulated dollar settlement bank.
Banks must monitor the flow of funds through networks to prevent profits from criminal activity inside and outside the economy. They need to know who their customers are and report transactions that tell authorities they may be illegal.
Deutsche Bank’s financial position improved after it began a review in 2019 aimed at significantly reducing costs and exiting certain operations, including trading in US stocks.
Deutsche Bank officials said on Thursday as they took a bullish tone at the bank’s annual shareholders meeting, lenders found a foothold and regained confidence in the market. They are also active in bank consolidation in Europe. He also said he hoped to play a role.
“People’s views on banking have changed dramatically,†CEO Christian Sewing said in a speech.
Sewing told shareholders the bank “has significantly strengthened its management system,” but added that it “recognizes areas that need to be improved,” including measures against financial crime.
The bank is struggling to dispel its reputation for loose control. In April, German financial regulator BaFin ordered the bank to take further steps to protect it from money laundering. .. BaFin said that Deutsche Bank must comply with due diligence obligations, especially regular customer reviews. Expansion of the role of controllers appointed in 2018 and oversight of implementation.
Deutsche Bank has dramatically improved its oversight over the past two years, spending around $ 2.4 billion and bringing its anti-money laundering team to over 1,600, following an order from the Federal Financial Supervisory Authority. More work is needed. Admitted that.
Deutsche Bank is under the supervision of an external observer appointed in 2017 as part of the resolution of the “Mirror Transaction†case appointed by the New York State Department of Financial Services in 2017.
The Wall Street Journal reported in November last year that observers were wary of a possible expansion of banking activity in Russia. In October, they told banks that efforts to improve their operations were not enough to offset the great risk of dealing with Russian customers and that banks should instead close their operations in Russia. I told you.
Earlier this month, the bank appointed Joe Salama, a U.S. legal adviser tasked with negotiating recent regulatory deals with U.S. officials, to head the global financial crime division. The move was aimed at improving relations between banks and regulators, according to people familiar with the matter.
Unlike his predecessor, based in Frankfurt, Salama divides time between Germany and the United States.
German anguish
More enriched WSJ articles on Deutsche Bank’s anti-money laundering regulations and publisher-selected sanctions.
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