How to Prevent Financial Crimes with Internal Controls in Germany: A Look at Deutsche Bank’s Changes
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Deutsche Bank has recently announced significant changes to its anti-financial crime and compliance teams, aimed at boosting its defenses against regulatory challenges. This move comes amid years of scrutiny and enforcement, including substantial fines in the US and Great Britain.
Shifting Focus from Compliance Shortcomings to Regulatory Challenges
According to a memo seen by The Wall Street Journal, the changes aim to shift the focus from addressing specific compliance shortcomings to tackling regulatory challenges in a more holistic and efficient manner. This marks a significant departure from the bank’s previous approach, with responsibilities for compliance functions now being handled by its chief risk officer rather than its chief administrative officer.
Strengthening Defenses Against Financial Crime
Experts say the move is an effort to increase the clout of Deutsche Bank’s anti-financial crimes unit, which is responsible for ensuring compliance with anti-money laundering and anti-corruption laws as well as economic sanctions. The bank has faced numerous challenges in recent years, including a $130 million settlement with the US government over alleged bribery and commodity-trading schemes.
Key Areas of Focus
To strengthen its defenses against financial crime, Deutsche Bank will be paying more attention to core areas such as:
- Risk Assessment: Identifying potential risks and vulnerabilities to prevent financial crimes.
- Transaction Monitoring: Monitoring transactions for suspicious activity and potential money laundering or terrorist financing.
- Controls Testing: Regularly testing internal controls to ensure their effectiveness in preventing financial crimes.
Clearer Responsibilities and Downsizing Councils
As part of its efforts to strengthen its defenses, Deutsche Bank will be defining responsibilities more clearly and identifying who is accountable for each task. The bank will also be downsizing councils and committees in the chief administrative office to increase efficiency and reduce bureaucracy.
Regulatory Pressure
The changes come on the heels of an order from Germany’s central financial regulator, the Federal Financial Supervisory Authority (BaFin), which instructed Deutsche Bank to strengthen its anti-money laundering controls. The regulator issued the order “to prevent money laundering and terrorist financing” and demanded that the bank adopt further internal safeguards and comply with due diligence obligations.
Commitment to Compliance
In a statement, Chief Administrative Officer Stefan Simon said the changes aim to boost the bank’s defenses against financial crime and ensure compliance with regulatory requirements. With these measures in place, Deutsche Bank is well-placed to prevent financial crimes and maintain its reputation as a leading financial institution in Germany.