Deutsche Bank fined US$16m by German prosecutors in Danske probe

[FRANKFURT] Deutsche Bank was fined 13.5 million euros (S$21.5 million) by Frankfurt prosecutors over money-laundering violations related to work with Danske Bank.

The bank failed on more than 600 occasions to file timely alerts to authorities about suspicious transactions, Frankfurt prosecutors said in a statement Tuesday. A related criminal probe against bank employees was dropped because no criminal action was found, they said.

The case is linked to a scandal that saw more than US$200 billion in suspicious transfers made through Danske Bank's Estonian unit. The vast majority of the money was also routed through Deutsche Bank, which at the time processed US dollar payments for the Estonian business, people familiar with the matter said last year.

Deutsche Bank said that it had ended its role as Danske Bank Estonia's so-called correspondence bank in 2015. It also emphasised that prosecutors had dropped the criminal probe.

"With the closure of these proceedings it is clear that there was no evidence of criminal misconduct either on the part of Deutsche Bank or its employees," Stefan Simon, a member of Deutsche Bank's management board, said in the statement.

Danske Bank declined to comment, beyond referring to previous statements. Chief executive officer Chris Vogelzang has said the bank expects to conclude its internal investigation by the end of the year. The bank also is seeking a global agreement with authorities to resolve the case.

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An internal investigation by Deutsche Bank found that about 90 per cent of the transactions handled via Danske Bank were tied to clients from Russia, Azerbaijan and other former Soviet republics whose identities were allegedly hidden with the help of Danske Bank employees, Frankfurt prosecutors said.

About 25,500 transactions came out of the "Azerbaijan laundromat," which was used from 2012 to 2014 to transfer money from Azerbaijan to Europe via Danske Bank and Deutsche Bank to Western countries. Part of that money was used to influence politicians in the European union, prosecutors said Tuesday.

BLOOMBERG