Fed Fines Deutsche Bank $186 Million for ‘Insufficient Remedial Progress’

The Federal Reserve has fined Deutsche Bank $186 million, saying it has made “insufficient remedial progress” on earlier consent orders around sanctions compliance and anti-money laundering (AML) controls.

The new consent order and fine relate to consent orders issued in 2015 and 2017 that had to do with deficient AML internal controls and governance processes during its relationship at that time with the Estonian branch of Danske Bank, the Fed said in a Wednesday (July 19) press release.

“This consent order requires Deutsche Bank to prioritize completion of several critical requirements of the Board’s prior orders,” the Fed said in the release.

In a second, separate enforcement action against Deutsche Bank AG, its New York branch and its other U.S. affiliates, the Federal Reserve announced a written agreement addressing “other general deficiencies” of the bank’s governance, risk management and controls, according to the release.

Responding to the two enforcement actions, Deutsche Bank said in a Wednesday statement that it is committed to maintaining robust risk management programs and that the enforcement actions relate to its “historic tardiness” in adhering to older actions and a correspondent banking relationship that ended in 2015.

“We appreciate that the Federal Reserve recognizes the progress we have made in recent years in remediating and resolving control weaknesses,” the bank said in the statement. “We also recognize that these actions reinforce the need to ensure we stand by our commitments and close our remediation obligations in the near future.”

Deutsche Bank added in the statement that it has taken several actions as part of this work, including enhancing its client due diligence and transaction monitoring and increasing the size of its global anti-financial crime team by more than 25%.

“Given the momentum we have built in the last two years, we believe we are well-positioned to meet our regulators’ obligations,” the bank said.

Deutsche Bank sharply cut down on its correspondent banking services in 2019 in the wake of an investigation of 200 billion euros (about $229 billion at the time) in suspected money laundering at Danske Bank’s Estonia branch.

The money was moved from 2007 to 2015, and Deutsche Bank said in 2019 that it had acted as a correspondent bank for Danske Bank in Estonia, helping to transfer funds for the bank from Estonia to other places around the world, and did not know about any malfeasance in terms of the transactions.