The bank said it has invested heavily in transaction controls since 2019.
(Photo: IMAGO/Jan Huebner)
New York, Frankfurt The US Federal Reserve has imposed a fine of 186 million US dollars on Deutsche Bank. The US bank supervisors justified this in a statement with the fact that Deutsche Bank had reduced deficits in the area of money laundering and sanctions control too slowly.
The deficits relate, among other things, to the money laundering scandal surrounding the Estonian branch of Danske Bank. The Fed had already identified them in 2015 and 2017 and called for improvements. The order that has now been issued obliges Deutsche Bank to prioritize the improvement of its control systems.
In a separate statement, the Fed credited the bank with “some progress” in addressing deficiencies in corporate governance, risk management and internal controls. This applies above all when dealing with liquidity risks. However, the bank must continue to implement further improvements.
In a statement, Deutsche Bank emphasized that “strong risk management is our top priority”. The focus is on controls in the areas of financial crime and compliance. The Institute welcomes the fact that the “Federal Reserve recognizes the progress we have made in improving our processes and eliminating weaknesses in controls over the past few years”. However, the bank is aware that it must complete its improvement measures “promptly”.
According to the bank, these measures include improvements in the verification of customers and the monitoring of transactions. The bank has invested a lot in such controls since 2019. For example, the global financial crime protection team (AFC) has grown by more than 25 percent to over 2,000 employees. “Given the momentum we have developed over the past two years, we believe we are in a good position to meet the expectations of our regulators,” the bank said.
The elimination of control deficiencies is also high on the priority list of Alex Wynaendts, who has been the head of the supervisory board since May 2022. Due to a lack of progress in this area, he had reduced a small part of the variable remuneration of all board members.
The importance of the topic also became clear during the institute’s most recent board restructuring: Stefan Simon, the board member responsible for compliance and regulatory issues, was chosen as the new US head. This means that the manager primarily responsible for such improvements will be based in the USA in the future.
The impact of the million-euro penalty on the half-year results that the bank will publish on Wednesday should be limited. The institute announced that the fine imposed was largely covered by provisions from previous quarters. “The additional charges are within the bank’s cost outlook for the second quarter,” said a spokesman.
More: Deutsche Bank discusses dual role of US board member Simon with ECB