THE Federal Reserve announced today (Wednesday) it had fined Deutsche Bank (DB) and its US affiliates $186M for insufficient progress addressing AML shortcomings flagged by the regulator.
Significantly, the Fed has demanded that Deutsche’s board “take steps to ensure the allocation of adequate financial, staffing, and managerial resources to fully comply” by year end with its OFAC Order and AML Order
Astonishingly, the Fed said Deutsche had not addressed issues identified as far back as its 2015 and 2017 consent orders. Moreover, there were still deficient controls relating to its prior relationship with the scandal-ridden Estonian branch of Danske Bank.
In strong language the Fed said there was a “material failure” to fix “unsafe and unsound banking practices.”
Strikingly, Deutsche had entered legally binding commitments to fix the problems, pledges the Fed now says were violated as the bank had “made insufficient progress in its remediation efforts”.
This meant Deutsche was:
– still “exposed to heightened levels of compliance risk without sufficient internal controls,”
– including “the risk of failing to detect money laundering activity or US sanctions violations”.
The Fed has also imposed a separate set of restrictions on the bank, ordering it to address ongoing shortcomings around its risk and data management.
Furthermore, the bank must prioritize addressing several of these issues or face “additional and escalated” penalties
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