Deutsche Bank Learns Anti Money Laundering (AML) Lessons the Hard Way

Deutsche Bank learns anti-money laundering lessons the hard way

Europe’s largest investment bank hit with £500m fine

Most companies, particularly financial institutions, understand that a small investment into proper anti-money laundering training for their staff is not only a necessary expense, but a long term money saver. But Deutsche Bank is not most companies. Europe’s largest investment bank was hit with a stunning £500m fine in January from multiple regulators because “the bank missed numerous opportunities to detect, investigate and stop the [money laundering] scheme due to extensive compliance failures, allowing the scheme to continue for years.”

Deutsche Bank ran a $10bn money laundering scheme that involved the Moscow, New York and London branches shifting roubles between Cyprus, Estonia and Latvia in a manner that was “highly suggestive of financial crime.” This follows a bad few months for the German bank which has seen it pay $7.2 bn to the US Department of Justice over toxic mortgage assets and another $2.5bn over interest rate manipulation.

“Mirror” trades between London and Moscow

This latest failing by the bank’s compliance team saw highly suspicious “mirror” trades being carried out, where stocks would be purchased in roubles in Moscow and then sold at the same price in London. The roubles were being converted to dollars through trades that “had no discernible economic purpose” in an “unsafe and unsound” manner.

The UK’s Financial Services Authority and the New York State Department of Financial Services who levied the fines pointed the finger of blame at understaffed and ineffective anti-financial crime teams.

Engaging in money laundering activity is not limited just to Deutsche Bank, however. Italian bank Intesa Sanpaolo was fined $235m, the Agricultural Bank of China was fined $215m, and the Mega Bank of Taiwan was fined $185m for money laundering failures on the same day.

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How are you managing your GDPR compliance requirements?

GDPR added a significant compliance burden on DPOs and data processors. Data breaches must be reported to the authorities within 72 hours, each new data processing activity needs to be documented and Data Protection Impact Assessments (DPIA) must be carried out for processing that is likely to result in a high risk to individuals. Penalties for breaching GDPR can reach into the tens of millions of Euros.

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