The New York State Department of Financial Services has ordered Germany’s biggest lender to pay $150 million for significant compliance failures, including suspicious transactions by accused child sex trafficker Jeffrey Epstein.
Despite the late billionaire’s troubled history, Deutsche Bank’s private banking division allowed Epstein to move money out of the United States. The regulator said it overlooked suspicious transactions, including payments to Russian models and $800,000 in cash withdrawals.
Those payments also included over $7 million in legal settlements, dozens of transfers to law firms totaling over $6 million for what appear to have been the legal expenses of Epstein and his co-conspirators. Deutsche facilitated these payments though he classified Epstein as a “high risk” client from the moment he became a customer.
“Whether or to what extent those payments or that cash was used by Mr Epstein to cover up old crimes, to facilitate new ones, or for some other purpose are questions that must be left to the criminal authorities, but the fact that they were suspicious should have been obvious to bank personnel at various levels,” the DFS said.
Epstein had been a client of Deutsche Bank since from 2013 to 2018, and helped him transfer millions of dollars for five years even after he pleaded guilty to prostitution-related charges.
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Deutsche Bank has maintained weak internal controls until federal prosecutor probing Epstein contacted its office in New York and Florida. Further, it ignored red flags raised by one of its compliance officers in 2015 and 2016 about the bank’s relationship with Epstein, who sexually abused dozens of underage girls at his homes in Manhattan and Florida.
This settlement marks the first enforcement action by a regulator against a financial institution for dealings with Jeffrey Epstein, who died in prison in August 2019 while awaiting trial. It also covers control lapses unrelated to Epstein’s case.
Specifically, the regulator faulted Deutsche Bank over ties to the money-laundering scandal at Danske Bank, Denmark’s biggest lender, as the authority joins global regulators in their investigation over the $230 billion that washed through a tiny Estonian branch.
Deutsche Bank reportedly played the largest role in helping the Danish firm purify its allegedly ill-gotten gains.
“In the cases of Danske Estonia and FBME, the Department concluded that Deutsche Bank failed to properly monitor the activities of their foreign bank clients with respect to their correspondent and dollar clearing business,” the statement further states.