Bloomberg, citing two people briefed on the situation who requested anonymity, reported the Federal Reserve’s move to look into how Deutsche Bank handled the transaction adds a new layer to what is amounting to one of the largest money laundering scandals on the books.
According to Bloomberg, the Federal Reserve’s inquiry is at an early stage and is looking at whether or not the U.S. arm of Deutsche Bank did enough to monitor funds from the Estonian branch of Danske Banke. Danske Bank has already said that about $230 billion that came from the Estonian branch may have been bad money. The reported noted that Danske Bank used correspondent banks including Deutsche Bank to move money around the globe.
In the U.S. banks that fall under its jurisdiction are required to flag any money laundering efforts by clients and alert authorities to suspicious transactions. The Fed is one of the regulators that makes sure banks have systems in place to meet that requirement. A Danske Bank whistleblower has previously said that a lot of the money laundering flowed through Deutsche Bank in the U.S. One of the sources told Bloomberg the Fed is looking at its trust bank and that Deutsche Bank has been cooperating with the Federal Reserve.
“There are no probes,” Deutsche Bank said in an emailed statement to Bloomberg, but noted it “received several requests for information from regulators and law enforcement agencies around the world. It is not surprising at all that the investigating authorities and banks themselves have an interest in the Danske case and the lessons to be learned from it. Deutsche Bank continues to provide information to and cooperate with the investigating agencies.” A Fed spokesman told Bloomberg it doesn’t publicly discuss confidential probes.
Last week Deutsche Bank’s chief executive officer Christian Sewing disclosed the bank has kicked off a further internal investigation into Deutsche Bank’s role in the money laundering scandal even though he said he hasn’t seen any evidence of any wrongdoing occurring.