The BaFin financial supervisory authority imposed a EUR 23.05 million fine on Deutsche Bank AG for violations of various regulatory obligations under German law.

The fines relate to the company’s failure to adhere to the Securities Trading Act (WpHG) in connection with the distribution of derivatives, along with Postbank’s failure to comply with recording obligations for investment advice and account change assistance requirements under the Payment Accounts Act (ZKG).

Deutsche Bank Penalized for Derivatives and Compliance Failures

Finance Magnates reached out to Deutsche Bank AG for a comment. A spokesperson said: "As communicated by BaFin, Deutsche Bank has accepted a fine of approximately 23 million euros in three regulatory offence proceedings. This fine is completely covered by existing provisions and will not impact 2025 financials."

BaFin's investigation focused on Deutsche Bank's handling of currency derivatives in Spain. The bank took an insufficiently timely approach to investigating and remedying legal breaches in the distribution of these derivatives. This failure led to proceedings by Spain’s Securities Commission (CNMV), which found Deutsche Bank did not take adequate organizational measures to address the violations promptly.

Additionally, Postbank, a subsidiary of Deutsche Bank, was found to have violated its telephone recording obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term for investment services. During the COVID-19 pandemic, temporary exceptions had allowed for flexibility, but once these exceptions expired, Postbank did not implement the necessary measures to ensure telephone consultations were properly recorded electronically.

The spokesperson added: "These proceedings are now concluded. Shortcomings included delays in the internal investigation of incidents related to some financial derivatives transactions in Spain; prolonged application of exemptions related to the COVID-19 pandemic for telephone consultations with investment advisors at Postbank; and deficiencies in the account switching service at Postbank up to August 2023, during the Unity migration. Deutsche Bank has fully cooperated with BaFin in all matters. Additionally, processes in the affected areas have been improved and controls have been strengthened."

Postbank Fined for Account Change Violations

Postbank was also cited for failing to properly handle customer applications related to account change assistance, as required by the ZKG.

The total fine of EUR 23.05 million is divided into three parts: EUR 14.8 million for the “derivative distribution” issue, EUR 4.6 million for the “telephone recording” violation, and EUR 3.65 million for failures in “currency transparent aid” for account changes.

Investment Firms Face Fines for Regulatory Violations

BaFin's decision is legally binding. The fine highlights the importance of investment services firms ensuring robust organizational practices that guarantee compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term with regulatory obligations, particularly in mitigating delays when investigating breaches and implementing corrective measures. Investment firms must also record telephone and electronic communications related to customer orders to protect investor rights and maintain legal certainty.

Failure to meet these obligations can result in fines, with the maximum fine for organizational breaches under the WpHG being EUR 5 million or up to 10% of total turnover. Similarly, violations of the ZKG related to account change assistance can result in fines up to EUR 300,000.