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The German financial watchdog has told Deutsche Bank to fix anti-money laundering controls, with CEO Sewing still in office and not fixing all the shortcomings in three years.
On Friday evening, BaFin said it had extended and extended KPMG’s mandate installed as a special representative in September 2018 to monitor the lender’s progress in tightening internal controls.
The appointment of a special representative in 2018 was an unprecedented move. Those familiar with the matter told the Financial Times that KPMG had received a new 36-month order from BaFin.
The watchdog has asked Deutsche to implement “more appropriate internal guarantees” and to “fulfill its obligations to be responsible”. Without going into details, BaFin said the lender must address the shortcomings “especially in terms of regular customer reviews,” but also “in the correspondent’s case.” [banking] relationships and transaction tracking ”.
In a statement on Friday, Deutsche said it had “significantly improved” controls, spent 2 billion euros on the issue in the last two years and now has 1,600 employees worldwide to tackle financial crime.
“We know it’s still to be done,” the lender said, adding that “in 2021 and beyond, it will continue to make significant investments, especially in the fight against financial crime.”
BaFin said its mandate is intended to “achieve lasting improvements in the prevention of money laundering by Deutsche Bank”, adding that the special monitor “will serve us to continue to monitor this now and in the future”.
The role of the auditor was extended by BaFin in February 2019 to investigate Deutsche Danske Bank’s role in Estonian money.whitening scandal, where the German lender was the correspondent bank and processed more than 160 billion euros in suspicious cross-border payments for the unit.
In October, Frankfurt prosecutors fine Deutsche Bank spent € 13.5 million on Danske Bank’s Estonian branch to report suspicious transactions.
Deutsche also in March he announced another reorganization of the control and enforcement organization, with Chief Legal Officer Stefan Simon in charge of the anti-financial crime unit and enforcement. These functions were handed over to Stuart Lewis, chief risk officer, in mid-2019, thereafter expulsion heavily criticized by Sylvie Matherat.
Lewis, the longest-serving member of the board, will step down from his position at AGM in 2022, a year before his contract expires, after a decade in the job.
Frank Kuhnke, Deutsche’s head of operations who was in charge of the customer knowledge procedure, will also leave the bank in May.
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