Jpmorgan drops accounts that become bad news for Deutsche Bank

THE trio of clients that got Deutsche Bank AG in regulatory trouble this week had a shared back story: They were all castoffs of Jpmorgan Chase and Co.

Deutsche Bank moved millions of dollars across the globe for convicted sex offender Jeffrey Epstein in the past decade, and billions on behalf of international lenders Danske Bank A/S and FBME Bank Ltd. Along the way, the German bank missed or disregarded compliance red flags for years, New York’s Department of Financial Services said Tuesday in levying Us$150mil in penalties.

Jpmorgan’s moves to offload those same clients years earlier may have helped it dodge a similar bullet.

The biggest US bank stepped away from handling money for FBME in 2009. It distanced from the others around 2013, the same year it undertook a broad purge of higher-risk clients from its correspondent banking business.

The bank had incentive to offload risky clients. Jpmorgan’s primary US regulator, the Office of the Comptroller of the Currency, put it on notice in early 2013, faulting its due diligence processes and ordering it to clean up its anti-money laundering controls. Later that year, the bank said it would spend Us$4bil to shore up its compliance operations – a process that included reviewing the accounts of hundreds of clients and shedding many of them.

Deutsche Bank, whose business is regulated in New York, said this week that it has cooperated with authorities and that it regretted bringing Epstein on as a client.

Although it acknowledged deficiencies in its oversight of the FBME and Danske relationships, the bank said it found no intentional effort to facilitate unlawful activity. It declined to comment for this article.