Security & Fraud

Tiny Deutsche Bank Unit At Heart Of Money Laundering Investigation

Deutsche Bank Investigated for Money Laundering

The center of the money laundering investigation at Deutsche Bank lies at a tiny unit that was barely able to eke out a profit and had been up for sale since the early part of 2016, reported Financial Times.

Citing several people briefed on the matter, the publication reported that the two-day raid last week of Deutsche Bank offices was aimed at finding evidence on a British Virgin Islands-based unit that was part of the bank's Global Trust Solutions (GTS) business, which had been up for sale in March of 2016. At that time, the business was handling trusts in low-tax locations, including Germany and the Virgin Islands, generating just a tiny portion of Deutsche Bank's overall annual revenue. In October of 2017, it announced a deal to sell the unit to N.T. Butterfield & Son, with the sale completed at the end of March. Details of the transaction were kept quiet, noted the report.

One of GTS’ legal entities was the British Virgin Islands-based Regula Limited, which, was named in the Panama Papers and, according to people familiar with the matter, is at the heart of the money laundering inquiry. In 2016, it operated trusts for around 900 clients, with €311m in assets. The vast majority of the clients were located in Asia-Pacific and Latin America, with only a small portion located in Germany. German authorities believe that Deutsche Bank clients transferred money that was tied to illegal activities to offshore accounts, and that the bank circumvented its legal duty to flag those transactions as suspicious.

The report noted that Deutsche Bank’s decision to sell the offshore trust business was part of a wider restructuring of its wealth management unit. The program, which was called "Protect, Transform, Grow,” was aimed at reducing the business risks of serving super-rich, private clients. The wealth management unit at Deutsche Bank has reduced the number of countries in which it operates, and screened clients living in one country but operating an account in another country for extra information, noted Financial Times.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.