Germany’s Financial Regulator Orders Deutsche Bank to Improve Money Laundering Controls

Deutsche Bank, Germany’s largest lender, has been ordered by the country’s financial regulator, BaFin, to take further measures to prevent money laundering. This move comes after a promising week for the bank, which posted its best quarterly profit in seven years and saw its share price surge to a three-year high.

Background

In 2018, BaFin took the unprecedented step of installing auditor KPMG as a special monitor at Deutsche Bank to oversee progress on money-laundering controls. This was following a series of lapses, including a massive fine of nearly $700 million for allowing money laundering. The fines were linked to a scheme of artificial trades between Moscow, London, and New York that authorities said were used to launder $10 billion out of Russia.

New Mandate

BaFin has now expanded KPMG’s mandate to improve controls, particularly regarding:

• Regular customer reviews
• Correspondent banking
• Transaction monitoring

Deutsche Bank acknowledges that there is still work to be done but insists it is committed to detecting and remedying any weaknesses in its control processes.

Efforts to Restore Profitability and Reputation

Under the leadership of CEO Christian Sewing, Deutsche Bank has been trying to restore profitability and its reputation after a string of misdeeds. This includes being sanctioned by New York regulators for ignoring warning signs while processing billions of euros of payments for Danske Bank, which was embroiled in a money-laundering scandal.

Ongoing Investigations

BaFin says it is seeking sustainable improvements in money laundering prevention at Deutsche Bank, but the bank’s efforts are still under scrutiny. The US Department of Justice is also still investigating the case.