B2B Payments

Deutsche Bank Discovers Years-Old AML Software Glitch

Deutsche Bank

Deutsche Bank has discovered a software glitch in its anti-money laundering (AML) processes as regulatory pressure continues to stress the global banking sector.

MarketWatch reported Wednesday (May 22) that Deutsche Bank discovered the glitch that prevents a program that retroactively scans and analyzes corporate payments to flag potentially suspicious transactions and identify patterns that can be notified to regulators. An unnamed source said the glitch may have been at play for nearly a decade.

The AML software program “was configured erroneously with two out of 121 parameters defined incorrectly,” the financial institution said in a statement Wednesday. “Deutsche Bank is working on correcting the error as quickly as possible and is in close contact with the regulators.”

Employees at the bank’s European operations reportedly discovered the glitch and notified regulators of the problem, which is still under investigation by Deutsche Bank. Reports noted it is unclear exactly how many transactions or which corporate clients of the bank may have been impacted.

Regulators use data from AML software analysis to identify potential money laundering and terrorism funding activity.

Deutsche Bank is already in regulators’ focus as a result of an ongoing money laundering scandal at Danske Bank. Late last year reports in the Financial Times said Deutsche Bank, which processes funds for Danske, had processed tens of billions of dollars more of Danske funds than previously thought, potentially heightening Deutsche Bank’s exposure to money laundering activity.

Authorities in Europe and the U.S. are scrutinizing Deutsche Bank for its role in enabling the money laundering. The bank said it stopped processing funds for Danske’s Estonian branch in 2015 after internal controls detected suspicious transactions, and notified supervisors of suspicious transactions it identified.

Analysts at Fitch recently correlated anti-money laundering controls that fall short with lower credit ratings of financial institutions, noting that AML shortcomings may actually have a larger impact on bank’s credit ratings than other non-financial factors.



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