Penalty imposed on Deutsche Bank: $186M for deficiencies in Anti-Money Laundering procedures
Deutsche Bank has been hit with a hefty fine of $186 million by the Federal Reserve, following allegations of anti-money laundering violations and unsafe practices related to Danske Estonia. The fine, announced on Wednesday, also includes a penalty of approximately $46 million for unsound practices.
The bank has been under scrutiny for failing to make sufficient progress on 2015 and 2017 consent orders related to its relationship with the Estonian branch of Danske Bank. In response, Deutsche Bank has agreed to prioritize the completion of controls that would resolve the previous enforcement actions, as per the Fed's order.
The fine largely covers provisions taken in previous fiscal quarters by Deutsche Bank. The bank has also been ordered to address its shortfalls in governance, risk management, and controls, as outlined in a written agreement issued by the Fed.
The latest penalty marks the latest in a string of issues Deutsche Bank has faced with U.S. and German regulators. Regulations and policy have been ongoing challenges for the bank.
In a move to strengthen its compliance efforts, Deutsche Bank's highest-ranking compliance official, Stefan Simon, will relocate to New York to take on additional responsibilities. This marks the first time such a position will be based in the U.S. Stefan Simon will take over the highest compliance position at Deutsche Bank in the USA starting in the period after May 31, 2025, as Karen Kuder, who reports to him as General Counsel and Global Head of Legal, was appointed then.
The fine is not the only issue Deutsche Bank has faced recently. In May, the bank agreed to pay $75 million to settle claims that it benefited from its client relationship with late sex offender and financier Jeffrey Epstein while being aware of his actions.
Deutsche Bank's asset-management unit DWS was also sued by a German consumer group in October for allegedly misrepresenting an investment fund's green credentials in marketing materials.
Despite the allegations, Deutsche Bank did not admit or deny the Fed's allegations but characterized its progress on the 2015 and 2017 matters as "historic tardiness." The bank's focus is maintaining robust risk management programs, with a special emphasis on Anti-Financial-Crime and Compliance controls.
The Fed has warned that Deutsche Bank may face additional penalties if it doesn't fix its outstanding issues. Christina Riley, former U.S. chief of Deutsche Bank, left the bank in May to take a role with Santander. Meanwhile, the bank is planning to purchase licensing rights.
The news about Stefan Simon's relocation to New York and his additional responsibilities was reported by Bloomberg.
