Multi-national investment bank Deutsche Bank has been penalized $150 million in the United States, for serious irregularities, including money transfers from the former Danske Bank branch in Tallinn. Deutsche's penalty, which it has consented to pay, is also connected to its relationship to disgraced American businessman Jeffrey Epstein.
New York State's Department of Financial Services (DFS) reported the penalty on its website.
Superintendent of Financial Services Linda A. Lacewell said that Deutsche Bank AG, its New York branch, and Deutsche Bank Trust Company America had together agreed to pay $150 million in penalties as part of a consent order entered into with the DFS for significant compliance failures in connection with its relationship with Jeffrey Epstein and correspondent banking relationships with Danske Bank Estonia, and also the now-defunct FBME Bank.
"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," Superintendent Lacewell said.
The DFS found that Deutsche Bank had failed to properly monitor the activities of their foreign bank clients, in regard to Danske Bank Estonia, with respect to their correspondent and dollar clearing business.
Danske Bank was ordered to close its Tallinn branch late last year after it emerged that over €230 billion in potentially illicit funds had passed through its portals in the period 2007-2015.
DFS: Danske Estonia provided banking services for Russian oligarchs
Danske Estonia suffered from inherent control failures, which resulted in large quantities of money being moved on behalf of Russian oligarchs, the DFS said.
Deutsche had repeatedly been put on notice of these failings and of the fact that few improvements were undertaken by Danske Estonia, the DFS said, and had put Dansker Estonia on it slightest possible risk rating, but this did not prevent Danske Estonia from transferring billions of dollars of suspicious transactions through Deutsche Bank accounts in New York, the DFS said.
Regarding FBME, which was based in Tanzania and served many Russian clients, Deutsche was the last major western bank to hold a correspondent banking relationship with it. FBME closed in 2017.
The agreement marks the first enforcement action by a regulator against a financial institution in respect of dealings with Jeffrey Epstein, the DFS added, saying that Deutsche's actions in not monitoring his transactions . Which amounted to millions of dollars and which included payments for "Russian models" as well as legal expenses for himself and his co-conspirators - were inexcusable given what it called his terrible criminal history.
Epstein, who took his own life in August 2019, stood charged with sex trafficking of minors in Florida and New York State. His links with U.K. Royal Family member Price Andrew, as well as socialite Ghislaine Maxwell, have been the subject of intense media scrutiny in recent months.
Editor: Andrew Whyte