The New York Department of Financial Services (DFS) will be charging Deutsche Bank a $150 million penalty for compliance issues regarding the bank’s relationships with Jeffery Epstein, Danske Bank Estonia, and FBME Bank. The penalty announced on the DFS website is the first of its kind to be applied to a financial institution by regulators for dealings with Epstein.

A class action lawsuit has since been filed on behalf of investors against the bank regarding its business with Epstein. Epstein was charged with sexual abuse and sex trafficking charges in 2019 before dying in his jail cell roughly two weeks later.

Epstein and Deutsche Bank

Deutsche Bank maintained a relationship with Epstein and “related individuals and entities from August 2013 until December 2018,” at which point the bank’s dealings with Epstein were ended. The bank ended its relationship with the notorious financier after the Miami Herald reported on a federal nonprosecution deal Epstein faced in Florida in 2008.

Deutsche Bank’s relationship with Epstein was a lucrative one. During their time working with him, the bank handled over 40 accounts tied to Epstein or related entities. The DFS said that a lack of oversight resulted in the processing of “hundreds of transactions totaling millions of dollars that, at the very least, should have prompted additional scrutiny in light of Mr. Epstein’s history.” Over time, the bank handled payments to people publicly alleged to be Epstein’s co-conspirators, over $7 million in settlements, and more than $6 million in transactions “for what appear to have been the legal expenses of Mr. Epstein and his co-conspirators.”

Also handled by the bank were payments “to Russian models, payments for women’s school tuition, hotel and rent expenses, and (consistent with public allegations of prior wrongdoing) payments directly to numerous women with Eastern European surnames,” according to the DFS. The order also describes “periodic suspicious cash withdrawals” made by Epstein and totaling more than $800,000 over the course of four years.

While a class action lawsuit has been filed on behalf of investors regarding alleged price losses related to the bank’s violations of securities law, Web24 News reports that such procedures are commonplace and usually fizzle out.

Did Deutsche Bank Know About Epstein’s Alleged Criminal Activity?

The New York DFS alleges that Deutsche Bank  “failed to properly monitor account activity conducted on behalf of the registered sex offender despite” publicly available information regarding “the circumstances surrounding Mr. Epstein’s earlier criminal misconduct.” The bank has agreed to comply with the consent order and pay the penalty.

According to CNBC, a junior relationship manager at Deutsche Bank sent a memorandum in 2013 which included information regarding Epstein’s 2007 Florida sex crimes case to the bank’s then co-head of the wealth management Americas group and the chief operating officer of the wealth management Americas unit. Put simply, bank officials knew about Epstein’s criminal history five years before terminating the bank’s relationship with him.

That memorandum was included as an attachment to an email discussing “how lucrative the relationship could be” with Epstein. The email notes ”[e]stimated flows of $100-300 [million] overtime [SIC] (possibly more)w/ revenue of $2-4 million annually over time,” according to the consent order.

Danske Bank Estonia, FBME Bank, and Deutsche Bank

Also included in the consent order are allegations regarding Deutsche Bank’s relationship with two other banks, Danske Bank Estonia and the Federal Bank of the Middle East (FBME). The DFS argues that Deutsche Bank failed to properly monitor their dealings with and the activities of their foreign bank clients, specifically in regards to their dollar clearing and correspondent business.

A Danske Bank branch in Tallinn, the capital of Estonia, was ordered to close last year after it came out that over €230 billion in potentially illicit transactions had been handled by the bank between 2007 and 2015. According to the Organized Crime and Corruption Reporting Project, the bank moved large sums of money on behalf of Russian oligarchs due to inherent control failures. Deutsche Bank knew about these failings but continued to work with the bank, transferring billions of dollars through New York-based Deutsche Bank accounts on its behalf.

Deutsche Bank allegedly ignored similar red flags when it came to FBME. The FBME was sanctioned for its activity by the U.S. Treasury Department’s Financial Crimes Enforcement Network at which point Deutsche Bank was required to end its relationship with the bank. Before that end, Deutsche Bank had processed nearly 500,000 dollar-denominated transactions worth more than $618 billion total on behalf of FBME.

This article is not legal advice. It is presented
for informational purposes only.