Deutsche Bank Struggles To Master Anti-Money-Laundering Task
Deutsche Bank AG acknowledged that its anti-money laundering processes remain inefficient more than a year after it was fined almost $700 million for helping wealthy Russians move money out of the country.
Responding to a Reuters report Friday that the bank had uncovered shortcomings in its ability to identify clients and the sources of their wealth, Germany’s largest lender said internal reviews showed its processes remain too complex, though they were effective.
“We are not struggling with procedures designed to help prevent criminals from money laundering and other criminal action,” Germany’s biggest lender said in a statement. “What the documents show is that our internal processes are still too complicated. So it is not about effectiveness, but about the efficiency of our processes. We still need to improve in terms of internal processes.”
The disclosure illustrates however, the many difficulties Deutsche is facing in convincing its supervisors that it has its house in order after a series of governance breakdowns. Last year, the Federal Reserve designated the bank’s U.S. business as ‘troubled’ and this year it failed the bank in its annual stress tests on qualitative grounds, citing “widespread and critical deficiencies” in its internal controls.
Deutsche Bank AG was fined by U.K. and U.S. authorities in 2017 for compliance failures that saw the bank help wealthy Russians move about $10 billion out of the country, using methods that the New York Department of Financial Services said could have been deployed to facilitate money laundering.
According to Reuters, the bank shared its findings in two reports in early June with its supervisor, the European Central Bank. The ECB declined to comment. German financial supervisor BaFin wasn’t immediately able to comment.
The reports showed that the automated ‘Know-Your-Customer’ controls — which were pushed hard by former Chief Executive John Cryan — were largely unable to perform key tasks, Reuters said. Those included the identification of so-called ‘Politically Exposed Persons’ who represent a higher money-laundering risk, and the verification of the source of a client’s funds, according to Reuters.
As such, Deutsche’s processes still need a continued high level of human input. Chief Risk Officer Sylvie Matherat said in April that another 400 people would be hired for her compliance department this year, a year in which the bank is trying to cut over 4,000 jobs on a net group-wide basis.
The reports cited by Reuters were filed less than two months after Deutsche Bank replaced Kim Hammonds, who had also overseen technology issues, as chief operating officer. She was succeeded as COO by Frank Kuhnke.
Author: Geoffrey Smith
Hong Kong Watchdog Issues Record HK$15.2 Million Fine To Chinese Broker Over Failure To Report Money Laundering
The Securities and Futures Commission, Hong Kong’s securities watchdog, has fined mainland Chinese state-owned firm Guosen Securities (HK) Brokerage a record HK$15.2 million (US$1.9 million) for failure to report money-laundering activity, it said on Monday. An...
With Brexit fast approaching, there are growing worries surrounding the U.K.’s financial and economic well-being after leaving the safety blanket of the European Union. Among fears of the U.K. heading towards economic turmoil, we must also consider the real threat...
The RCMP has filed charges against 17 people accused of taking part in a multi-million-dollar money-laundering scheme. Police arrested 14 people on Monday in the Montreal and Toronto area, but three suspects are still at large. According to the RCMP, members of the...