German authorities raid Deutsche Bank in money laundering probe

German authorities raid Deutsche Bank in money laundering probe

German authorities raid Deutsche Bank in money laundering probe

Germany’s federal police office, criminal prosecutors and the country’s financial watchdog BaFin raided Deutsche Bank’s headquarters in Frankfurt on Friday, prosecutors said in a statement.

Prosecutors said a search warrant had been issued by the Frankfurt District Court, based on suspicions that anonymous Deutsche Bank employees may have breached anti-money laundering laws. They declined to give further details.

Deutsche Bank confirmed the raid and said it was linked to suspicious activity reports issued by the bank which pointed to potential money laundering, adding that it was “cooperating fully with the authorities”.

A person familiar with the police investigation told the Financial Times that the raid involved a payment from Rifaat al-Assad, an uncle of the Syrian president; he was sentenced to four years in prison for money laundering in France last year. Assad was not a client of Deutsche Bank, but the German bank about five years ago had cleared at least one payment on behalf of a lender where Assad had an account.

Deutsche’s corporate bank offers correspondent banking services to other lenders. In such transactions, it acts as an intermediary, clearing cross-border money flows between banks.

The payment was spotted by Deutsche Bank when it reviewed its data for Assad-related transactions after his conviction in France, and it was later reported to Germany’s anti-money laundering authority. The Assad connection was first reported by Handelsblatt.

Other people told the FT the raid involved potentially suspicious money that Deutsche cleared as a correspondent bank, but did not confirm the identity of the person involved.

The raid was sparked by the late filing of the transaction, with criminal prosecutors suspecting the lender breached its legal obligations by not reporting them sooner, the sources said.

The raid is a blow to chief executive Christian Sewing who has vowed to end Deutsche’s long history of legal setbacks and misconduct following his promotion to the top job four years ago. “Over the past few years, we have significantly reduced our legal risks,” he said in 2019, adding that the bank had spent “a lot” to strengthen its internal controls. “We are constantly improving and will not compromise.”

Deutsche Bank shares fell nearly 3% on the news, but mostly rallied in the early afternoon.

The raid was unrelated to a suspicious activity report Deutsche Bank had filed over a €160,000 payment made by a customer to one of its most senior bankers in 2018, others told the FT. people close to the file. At the time, Asoka Wöhrmann, then Deutsche’s head of private clients in Germany, received the money from Frankfurt-based entrepreneur Daniel Wruck, the Financial Times reported in January.

The men later explained that the payment was part of a failed attempt to buy a Porsche. Wöhrmann has since become managing director of asset manager DWS and is being investigated by Deutsche Bank over that transaction as well as the alleged use of a private email address for marketing purposes.

In recent years, Deutsche Bank has been constantly criticized by regulators for inept anti-money laundering controls. A year ago, BaFin again ordered Deutsche Bank to do more to improve its controls in this area. At the time, Germany’s financial watchdog broadened and extended the mandate of consultancy firm KPMG, which it installed as a special representative in September 2018 to monitor the lender’s progress in strengthening its internal controls.

BaFin also urged the country’s largest bank to put in place “appropriate additional internal safeguards” and to “comply with due diligence obligations”. Without going into details, BaFin said the lender needed to fill gaps “particularly with regard to regular customer reviews” but also in its “correspondent [banking] follow-up of relations and transactions”.

In November 2018, Deutsche Bank was raided by 170 police, prosecutors and tax inspectors for suspected money laundering in a raid that hit the bank’s shares.

Next, investigators focused on suspicious transactions in the bank’s wealth management division between 2013 and 2018. The criminal investigation into the case was later dropped, but Deutsche Bank paid 15 million euros for deficiencies in money laundering controls.

In October 2020, prosecutors in Frankfurt fined the bank €13.5 million for late reporting suspicious transactions it was processing for the Estonian branch of Danske Bank.

The lender subsequently announced an organizational overhaul of its financial crime unit, giving responsibility to its administrative director Stefan Simon. In an interview with the FT last year, Simon acknowledged that competitors had started tightening their financial crime controls earlier than Deutsche.

“We’ve been behind and catching up for a while now,” he told the FT. He launched a fundamental overhaul of the bank’s compliance, centralizing the department at the lender’s headquarters in Frankfurt and replacing nearly half of the senior staff in control functions, including its anti-money laundering group head. Deutsche has also earmarked an additional but undisclosed sum for the compliance review.

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