Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. COURTS
July 07, 2020 02:37 PM

Deutsche Bank to pay $150 million over Epstein breaches

James Comtois
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    A protest group holds up signs of Jeffrey Epstein in front of the Federal courthouse in New York on July 8, 2019.
    Bloomberg

    New York state authorities said widely available information about Jeffrey Epstein's criminal misconduct should have prompted Deutsche Bank officials to take action.

    Deutsche Bank and related entities agreed to pay $150 million in penalties in connection with its relationship with Jeffrey Epstein and its correspondent banking relationships with Danske Bank Estonia and FBME Bank.

    The penalty was assessed by the New York State Department of Financial Services, which announced in a news release issued Tuesday that Deutsche Bank failed to properly monitor account activity conducted on behalf of the late registered sex offender, despite the availability of plentiful, publicly available information regarding Mr. Epstein's criminal misconduct.

    The department contends that the bank processed hundreds of transactions totaling millions of dollars that should have prompted additional scrutiny considering Mr. Epstein's history, such as payments to Mr. Epstein's alleged co-conspirators; millions paid in settlement agreements and legal expenses; payments to Russian models, payments for women's school tuition, hotel and rent expenses; and suspicious large cash withdrawals over the course of four years.

    Despite this suspicious activity, "very few problematic transactions were ever questioned, and even when they were, they were usually cleared without satisfactory explanation," the news release said.

    The department also concluded that Deutsche Bank failed to properly monitor the activities of foreign bank clients Danske Estonia and FBME regarding their correspondent-banking business and dollar-clearing business.

    Deutsche Bank was repeatedly informed that Danske Estonia suffered from inherent control failures resulting in large quantities of money being moved on behalf of Russian oligarchs. Despite these lack of controls, and despite Deutsche Bank assigning Danske Estonia its highest possible risk rating, Deutsche Bank failed to prevent Danske Estonia from transferring billions of dollars of suspicious transactions through Deutsche Bank accounts in New York.

    Deutsche Bank's relationship with FBME similarly represented the bank's failure to act on red flags. Deutsche Bank considered FBME to be a high-risk client that required annual enhanced anti-money laundering checks. Despite these checks, there was little evidence that FBME improved the quality of its controls over several years.

    Eventually, the U.S. Treasury Department's Financial Crimes Enforcement Network mandated that all banks operating in the U.S. to stop doing business with FBME. By that point, Deutsche Bank was the last major Western bank to have a correspondent banking relationship with FBME.

    "Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system, and it is fundamental that banks tailor the monitoring of their customers' activity based upon the types of risk that are posed by a particular customer," said Linda A. Lacewell, superintendent of financial services, in the news release. "In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the bank itself deemed to be high risk. In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein's terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions."

    "While the settlement reflects our upmost cooperation and transparent engagement with our regulator, it also shows how important it is to continue investing in our controls and enhancing our anti-financial crime capabilities," a Deutsche Bank spokesman said in an emailed statement. "To that end, we have invested almost $1 billion in improving our training, controls and operational processes, and have increased our anti-financial crime team to more than 1,500 people."

    The statement added that there "was no intentional effort by anyone within the bank to facilitate unlawful activity."

    Deutsche Bank CEO Christian Sewing wrote in an internal communication to staff that the settlement "serves as a reminder of how vigilant we must remain."

    "(W)e all have to help ensure that this kind of thing does not happen again," Mr. Sewing wrote. "It is our duty and our social responsibility to ensure that our banking services are used only for legitimate purposes. That's exactly why we should always examine things critically, ask questions and speak up."

    Mr. Sewing added in the memo that taking Mr. Epstein "as a client in 2013 was a critical mistake and should never have happened."

    Related Articles
    MIT president addresses Jeffrey Epstein donations
    Labor Secretary Acosta defends actions in past Epstein plea deal
    CalPERS asks Apollo about Epstein news
    Recommended for You
    ONLINE_180539987_AR_0_AJVEYGQPKZAX.jpg
    Federal judge dismisses ERISA complaint against Olin
    gavel_scales_lawbook_1550-main_i.jpg
    Appeals court upholds dismissal of ERISA suit against CommonSpirit Health
    Ben&Jerrys-Unilever-main_i.jpg
    St. Clair Shores Police and Fire sues Unilever, alleging securities law violations
    New SEC Rule on Fair Pricing Determination Needs Careful Consideration
    Sponsored Content: New SEC Rule on Fair Pricing Determination Needs Careful Consideration

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    June 20, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit