Deutsche Bank fined US$41m for money-laundering lapses

[WASHINGTON] Deutsche Bank AG agreed to pay US$41 million to settle Federal Reserve allegations that its US operations failed to maintain adequate protections against money laundering.

The Frankfurt-based bank's US operations fell short in complying with the Bank Secrecy Act, which requires lenders to help federal agencies prevent illegal transactions, the Fed said in a brief Tuesday statement.

The regulator imposed a cease-and-desist order on Deutsche Bank that requires it to address "unsafe and unsound practices". The bank also agreed to improve its controls and boost oversight of senior management.

"We are committed to implementing every remediation measure referenced in the Fed's order and to meeting their expectations," Deutsche Bank said in an emailed statement.

Deutsche Bank's insufficient monitoring involved billions of dollars in "potentially suspicious transactions" that were processed between 2011 and 2015, the Fed said. The transactions involved affiliates in Europe that failed to provide "accurate and complete information," the regulator said.

Multiple Investigations

While the Fed didn't disclose any specific transactions that were improper, Deutsche Bank has faced multiple investigations by various regulators into whether it allowed customers to engage in illicit trades. Deutsche Bank has recently reached settlements with the UK and New York State's Department of Financial Services over trades that allegedly helped wealthy Russians move some US$10 billion out of the country.

The settlements involved what are known as mirror trades, in which bankers purchased Russian stocks in rubles while selling the same amount of shares in London. The trades effectively converted rubles to dollars, and the cash flowed from the UK through Cyprus, Estonia and the US, investigators say. The deficiencies cited by the Fed include controls over transactions like mirror trades, said one person with knowledge of the matter.

In its settlement with the Fed, Deutsche Bank agreed to enlist an outside monitor to review transactions with international banks in the second half of 2016 - a timeframe that could expand depending on the monitor's findings. The bank also agreed for the outside monitor to review its compliance with anti-money laundering laws.

Deutsche Bank's insufficient monitoring involved billions of dollars in "potentially suspicious transactions" that were processed between 2011 and 2015, the Fed said. The transactions involved affiliates in Europe that failed to provide "accurate and complete information," the regulator said.

BLOOMBERG