The Federal Reserve said on Wednesday it fined Deutsche Bank and its U.S. affiliates $186-million for failing to sufficiently address money laundering and other shortcomings flagged by the U.S. central bank.
Deutsche must prioritize addressing several of those issues or face “additional and escalated” penalties, the Fed said. It separately also ordered the bank to improve its risk and data management.
The Fed had identified the previous issues in 2015 and 2017 consent orders, which stemmed from deficient controls in Deutsche’s relationship with the Estonian branch of Danske Bank, which ended in 2015.
The Biden administration has vowed to crack down on repeat corporate offenders and illicit funds flowing through the U.S. financial system.
In a statement, Deutsche Bank said it is committed to addressing the Fed-identified shortcomings in the “near future,” and said the fine is largely covered by provisions taken in prior quarters.
“Given the momentum we have built in the last two years, we believe we are well positioned to meet our regulators’ expectations,” the bank said.
For Deutsche, the Fed’s penalties mark the latest in years of regulatory struggles. In November, the German finance watchdog told Deutsche to improve its money laundering controls. U.S. and German regulators have launched probes into greenwashing allegations at Deutsche-controlled investment management firm DWS.
The bank in 2021 agreed to pay $125-million to avoid prosecution on charges that it manipulated precious metals markets and engaged in foreign bribery schemes.
In its latest order, the Fed said it found a “significant portion” of the $276-billion in transactions Deutsche cleared for Danske Bank involved “high-risk non-resident customers.” Shortcomings in Deutsche’s policies on money laundering persisted after its relationship with Danske ended in 2015, the Fed said.
In December, Danske pleaded guilty to a bank fraud conspiracy and agreed to forfeit $2-billion to settle a long-running Department of Justice probe into billions of dollars of illicit payments.