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Deutsche Bank sanctions overview:
- Who: The Federal Reserve has ordered Deutsche Bank to pay a $186 million fine.
- Why: The fine was levied over claims Deutsche Bank failed to adequately comply with consent orders from 2015 and 2017 that asked the bank to address shortcomings with its anti-money laundering and sanctions compliance.
- Where: Deutsche Bank is worldwide.
The Federal Reserve has ordered Deutsche Bank to pay a fine of $186 million over claims the financial institution failed to make sufficient progress in addressing previously identified concerns with its anti-money laundering and sanctions compliance, among other things.
Deutsche Bank, along with its U.S. affiliates, did not do enough to satisfy a pair of consent orders from 2015 and 2017 that cited them for alleged failures in U.S. sanctions compliance and in their anti-money laundering controls, the Fed argued.
The Fed claimed that, contrary to the orders, the bank’s U.S. operations “have remained exposed to heightened levels of compliance risk without sufficient internal controls.”
Included in this risk was the risk of “failing detect money laundering activity or U.S. sanctions violations,” according to the recent consent order.
Deutsche Bank cited for previous relationship with scandal-ridden former Estonian branch of Danske Bank
The Fed also cited Deutsche Bank for weakness with its anti-money laundering controls, citing a previous correspondent banking relationship it had with Danske Bank’s former Estonian branch, which was plagued by scandals.
“From 2007 until the end of the relationship in 2015, [Deutsche Bank Trust Company Americas] cleared more than $267 billion in transactions for Danske Estonia, a significant portion of which involved high-risk non-resident customers of Danske Estonia,” the Fed said.
In addition to the monetary penalty, the Fed has also ordered Deutsche Bank to “prioritize the completion” of “milestones and tasks” that were given to it in the consent orders from 2015 and 2017.
Deutsche Bank has not admitted or denied “any allegation made or implied” by the Fed, which said it has entered into a separate written agreement with the bank to tackle other “deficiencies in governance, risk management and internal controls,” the agency has identified.
“Although more recently the Firm has made some progress in remediating these deficiencies particularly with respect to liquidity risk management, the Firm must continue to implement additional improvements,” the Fed said.
Deutsche Bank also found itself on the receiving end of a class action lawsuit filed last month against it and three other major banks over claims they had conspired in an online chatroom to fix the price of British pound sterling denominated UK government bonds.
Do you agree with the Fed’s decision to fine and place sanctions on Deutsche Bank? Let us know in the comments!
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