Deutsche Bank in money laundering probe
Bank’s Frankfurt offices raided over allegations; shares fall more than 3%
Police raided six Deutsche Bank offices in and around Frankfurt yesterday over money laundering allegations linked to the Panama Papers, the public prosecutor’s office in Germany’s financial capital said.
Investigators are looking into the activities of two unnamed Deutsche Bank employees alleged to have helped clients set up offshore firms to launder money, the prosecutor’s office said.
Around 170 police officers, prosecutors and tax inspectors searched the offices where written and electronic business documents were seized.
“We will cooperate closely with the public prosecutor’s office in Frankfurt, as it is in our interest as well to clarify the facts,” Deutsche Bank said.
The news comes as Deutsche Bank tries to repair its tattered reputation after three years of losses and a drumbeat of financial and regulatory scandals.
Christian Sewing was made chief executive in April to help the bank rebuild. He trimmed US operations and reshuffled the management board but revenue has continued to slip. Deutsche Bank shares were down more than 3 per cent by 1220 GMT and have lost almost half their value this year.
Offshore links
The investigation was triggered after investigators reviewed so-called ‘OffshoreLeaks’ and ‘Panama Papers’.
The latter, which consist of millions of documents from Panamanian law firm Mossack Fonseca, were leaked to the media in April 2016.
Several banks, including Scandinavian lenders Nordea and Handelsbanken have already been fined by regulators for violating money laundering rules as a result of the papers.
The prosecutors said they are looking at whether Deutsche Bank may have assisted clients to set up offshore companies in tax havens so that funds transferred to Deutsche Bank accounts could skirt anti-money laundering safeguards.
In 2016 alone, over 900 customers were served by the bank’s subsidiary, registered on the British Virgin Islands, generating a volume of €311 million, the prosecutors said.
They also said Deutsche Bank employees are alleged to have breached their duties by neglecting to report money laundering suspicions about clients and offshore companies involved in tax evasion schemes.
The investigation is separate from another money laundering scandal surrounding Danish lender Danske Bank, where Deutsche Bank is involved.
Danske is under investigation for suspicious payments totalling €200 billion (Dh735 billion) from 2007 onwards and a source with direct knowledge of the case has told Reuters Deutsche Bank helped to process the bulk of the payments.
Under scrutiny
Weaknesses in Deutsche Bank’s controls have caught the attention of regulators on both sides of the Atlantic. In September, Germany’s financial watchdog — BaFin — ordered Deutsche Bank to do more to prevent money laundering and “terrorist financing,”, appointing KPMG to assess progress.
In August, Reuters reported that Deutsche Bank had uncovered further shortcomings in its ability to fully identify clients and the source of their wealth.
Last year, Deutsche Bank was fined nearly $700 million (Dh2.57 billion) for allowing money laundering through artificial trades between Moscow, London and New York.