BaFin once again finds fault with Deutsche Bank’s control mechanisms


German financial supervision has ordered Deutsche Bank to correct its anti-money laundering controls, showing that Christian Sewing, chief executive, has still not addressed all the loopholes three years after taking office.

BaFin said on Friday evening that it had broadened and extended KPMG’s tenure, that it installed as a special representative in September 2018 to monitor the lender’s progress in strengthening its internal controls.

The appointment of the special representative was an unprecedented move in 2018. People familiar with the matter told the Financial Times that KPMG had received a new 36-month term from BaFin.

The watchdog called on Deutsche to put in place “appropriate new internal safeguards” and “comply with due diligence obligations”. Without going into details, BaFin said that the lender had to tackle the shortcomings “especially with regard to regular customer reviews” but also in its “correspondent [banking] relations and transaction monitoring ”.

In a statement on Friday, Deutsche said it had “dramatically improved” its controls, spending € 2 billion on it over the past two years and now has 1,600 employees globally to combat it. financial crime.

“We are also aware that there is still work to be done,” said the lender, adding that it “will continue to invest heavily in 2021 and beyond, especially in the fight against financial crime”.

BaFin said his order was “intended to bring lasting improvements in money laundering prevention at Deutsche Bank,” adding that the special monitor “will help us continue to monitor this closely, now and in the future. “.

The auditor’s mandate was extended by BaFin in February 2019 to investigate Deutsche’s role in Danske Bank money in Estonia.money laundering scandal, where the German lender was a correspondent bank and processed more than 160 billion euros in potentially suspicious cross-border payments for the unit.

In October, prosecutors in Frankfurt fined Deutsche Bank EUR 13.5 million for the late reporting of suspicious transactions it processed for the Estonian branch of Danske Bank.

Deutsche in March too ad a further reorganization of its control and compliance organization, giving legal director Stefan Simon responsibility for its financial crime and compliance unit. These functions were assigned to Stuart Lewis, Chief Risk Officer, in mid-2019 after the oust the much criticized Chief Compliance Officer Sylvie Matherat.

Lewis, the longest-serving board member, will resign at the 2022 AGM, a year before his contract expires, after having held the position for a decade.

Frank Kuhnke, COO, who was in charge of Deutsche’s know-your-customer procedures, will also be leaving the bank in May.



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