Deutsche Bank threatened with fines for controlling money laundering

Germany’s top financial watchdog has threatened to fine Deutsche Bank AG if it fails to implement anti-money laundering checks within a set deadline, suggesting the regulator is unhappy with efforts of the bank to control the flow of dirty money.

BaFin, as the regulator is known, said on Friday evening that on September 28 it had asked Deutsche Bank to take specific measures to prevent money laundering and terrorist financing in order to be able to respond to requests BaFin made in 2018 and 2019. The regulator said it would impose financial sanctions if the bank fails to comply.

The regulator last year expanded the role of a monitor it appointed in 2018 to monitor implementation, showing it was still unhappy with progress.

Deutsche Bank must meet the deadlines by mid-2023.

A bank spokesman said there were no new findings in the latest order. “We are fully aligned with BaFin on the necessary measures and have already achieved a large part of them,” he added.

BaFin’s latest warning adds pressure on CEO Christian Sewing, who since taking over the bank in 2018 has tried to steer it away from scandals and focus on operations. Last week, it reported higher third-quarter profits as higher interest rates improved its lending business. Costs, however, remain under pressure, in part due to the bank’s spending to strengthen internal controls.

Past issues with regulators include paying fines to the United States for failing to properly oversee dealings with late financier and convicted sex offender Jeffrey Epstein and for his role as a correspondent bank for the Estonian branch of Danske Bank A/ S, where some $230 billion had flowed from Russia and other former Soviet states over the years with little oversight.

Deutsche Bank also set up monitors as part of a 2017 settlement with New York state authorities over “mirror trades,” in which the bank moved $10 billion of cash of Russian customers outside the country.

Following Russia’s invasion of Ukraine, Deutsche Bank said it would withdraw from the country.

Write to Patricia Kowsmann at [email protected]

James V. Hayes