money laundering

Financial watchdog plants investigator at Deutsche Bank

People are silhouetted next to the Deutsche Bank’s logo prior to the bank’s annual meeting in Frankfurt
Bafin hoping to shed some light on Deutsche's customers. Source: Reuters

Germany’s financial services regulator on Monday installed a special investigator at Deutsche Bank to ensure the country’s biggest listed bank is doing enough to combat money laundering. The watchdog hired KPMG to fill the special investigator role and insiders say the auditor will keep an eye on the Frankfurt bank’s efforts through 2021. It’s the first time the regulator, known as Bafin, has taken such a step for money laundering.

“We agree with Bafin that we need to further improve these processes in corporate and investment banking,” Deutsche Bank said. The lender is in the throes of a painful restructuring that has seen three changes of CEOs in as many years, sparked partly by legal woes.

In early 2017 the bank was fined $630 million (€535 million) because Russian customers had laundered billions through the institution. Deutsche had promised to improve, but Bafin apparently isn’t impressed.

Deutsche isn’t alone

Europe has been shaken by a series of money-laundering scandals. Latvia’s ABLV was closed early this year after the US Treasury Department accused it of money laundering, and Dutch ING was fined €775 million for inadequate customer controls. And Danske Bank CEO Thomas Borgen resigned last week after an investigation discovered €200 billion had been cleansed through Denmark’s biggest bank.

The German regulator did not impose any new fines on Deutsche. An insider said Bafin didn’t discover any fresh money laundering attempts, but that it was unhappy with Deutsche’s efforts to keep out illegal transactions — information wasn’t transmitted quickly enough and the bank was too sluggish in implementing new regulations. “The special investigator is to report on the progress of the measures and evaluate them,” Bonn-based Bafin said.

Bafin’s criticism casts a bad light on the work of Sylvie Matherat, the head of regulation who’s also responsible for money-laundering prevention at board level. Ironically, Phillippe Vollot, the chief anti-money-laundering officer, recently left the bank to become a board member at Danske Bank.

Frank Kuhnke, who became COO and head of Deutsche’s IT in April, is now in charge of improving the vetting of customers.

Unlike the supervision of large banks, fighting money laundering is the job of the national supervisory authorities. However, the EU wants to pool its strengths in this area and bolster the European Banking Authority.

Yasmin Osman is a financial editor with Handelsblatt’s banking team in Frankfurt, while Andreas Kröner covers banks and financial markets. Andrew Bulkeley, an editor at Handelsblatt Global, adapted this article into English. To contact the authors:

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!