BaFin once again finds fault with Deutsche Bank’s control mechanisms



The German financial watchdog has ordered Deutsche Bank to resolve its controls against money laundering to an extent that shows that Christian Sewing, no executive, has yet to resolve all the shortcomings three years after taking office.

On Friday evening, BaFin said it had expanded and expanded KPMG’s mandate, which made it installed as a special representative in September 2018 to monitor the lender’s progress in consolidating its internal controls.

The appointment of the special representative was an unprecedented move in 2018. People familiar with the matter told the Financial Times that KPMG had received a new 36-month term from BaFin.

The watchdog has called on Deutsche to establish “more adequate internal guarantees” and “comply with due diligence obligations”. Without going into details, BaFin said the lender had to address the deficiencies “particularly with regard to regular customer reviews,” but also to its [banking] relationships and transaction control ”.

In a statement on Friday, Deutsche said it had “significantly improved” its controls, spending 2 billion euros on the matter over the past two years and now has 1,600 employees worldwide to fight financial crime.

“We are also aware that there is still work to be done,” said the lender, who added that “it will continue to invest heavily in 2021 and beyond, especially in the fight against financial crime.”

BaFin said his order “was intended to achieve sustainable improvements in the prevention of money laundering at Deutsche Bank,” adding that the special monitor “will help us continue to closely monitor this, both now and in the future.”

The auditor’s mandate was extended by BaFin in February 2019 to investigate Deutsche’s role in Danske Bank’s Estonian laundering scandal, where the German lender was a correspondent bank and processed more than € 160 billion in potentially suspicious cross-border payments for the unit.

In October, Frankfurt prosecutors fine Deutsche Bank 13.5 million euros for the late notification of suspicious transactions that it processed for the Estonian branch of Danske Bank.

Deutsche also in March announced another reorganization of his control and compliance organization, which puts Stefan Simon at the head of the law at the head of his anti-financial crime and compliance unit. These functions were assigned to Stuart Lewis, director of risk, in mid-2019 after the expulsion of the much-criticized head of compliance Sylvie Matherat.

Lewis, the longest-serving board member, will resign from the AGM in 2022, a year before his contract ends, after holding the position for a decade.

Frank Kuhnke, chief operating officer, who was in charge of Deutsche’s customer knowledge procedures, will also leave the bank in May.


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