Deutsche Bank Reviews Show It Needs To Do More To Prevent Money Laundering

Due diligence

Deutsche Bank, more than a year after being hit with a fine of close to $700 million for enabling money laundering, has discovered more issues in its ability to completely identify clients and where their money is coming from.

Reuters, citing internal documents it obtained, reported that in two reviews that took place on June 5 and July 9, Germany’s largest lender laid out gaps it found in Deutsche Bank’s screening process, which is aimed at staying in line with the Know Your Customer requirements to prevent money laundering. The German lender, noted Reuters, ran tests on a sample of its customers in several countries including Russia. Based on regulation on the books around the world, banks have to make sure their customers aren’t criminals and aren’t trying to hide their identity via confusing ownership structures so that the individual could engage in money laundering or get around international sanctions, noted the report.  Deutsche Bank, in the two reviews, was given a pass rate of zero percent in Russia, Ireland, Spain, Italy and South Africa. The pass rate looks at the percentage of customers that meet the Know Your Customer standards. Deutsche Bank wants a pass rate of 95 percent, noted the report.

In a statement to Reuters, a spokesperson for Deutsche Bank said that its processes were too complex — but that in improving controls to prevent money laundering, it has been more effective. “We still need to improve in terms of internal processes,” it said, when presented with the findings of the reviews, reported Reuters. “What the documents show is that our internal processes are still too complicated. So it is not about effectiveness, but about the efficiency of our processes.” In late July executives at Deutsche Bank met with the European Central Bank, which is the banking supervisor for the eurozone, to discuss its procedures, reported Reuters, citing one source with knowledge of the matter. Back in January of 2017, the bank agreed to pay the nearly $700 million in fines due to fake trades between Moscow, London and New York that were used to launder $10 billion out of Russia.

In a written response to Reuters, Deutsche Bank said: “We are not struggling with procedures designed to help prevent criminals from money laundering and other criminal action. Our procedures to identify potential anti-money laundering and KYC risks are very effective.” A person close to the matter told Reuters that Deutsche Bank has several layers in place to spot crimes including monitoring fund movements.



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