January 16, 2021

GERMANY: Deutsche Bank Paid $130 Million To US Prosecutors To Avoid Criminal Charges After Admitting Bribing Foreign Officials, Money Laundering And Moving Suspicious Payments For Jeffrey Epstein.

International Consortium for Investigative Journalists
written by Spencer Woodman
Tuesday January 12, 2021

To resolve an investigation into a foreign bribery scheme, the German lender entered a deferred prosecution agreement — a common way for big banks to avoid criminal charges.

Deutsche Bank has agreed to pay over $130 million to resolve allegations that the German bank had devised a “scheme to conceal corrupt payments and bribes” to bolster its business around the world, U.S. prosecutors announced late last week.

Beginning in 2009, Deutsche Bank embarked on a seven-year course of misconduct, prosecutors said, funneling more than a million dollars in outright bribes and millions more in related expenses to so-called “business development consultants” around the world. Prosecutors say the German bank misrepresented these expenses in its recordkeeping.

The scheme included prominent portions of Deutsche Bank’s executive leadership, who “knowingly and willfully conspired” to hide and falsify payments to crooked consultants, prosecutors said. The U.S. Foreign Corrupt Practices Act forbids companies operating in the U.S. from paying bribes abroad. Deutsche Bank’s violations of these laws spanned Saudi Arabia, Abu Dhabi, Italy and China, according to prosecutors.

Last year, the International Consortium of Investigative Journalists’ FinCEN Files investigation found that Deutsche Bank helped move hundreds of millions of dollars for a Ukrainian oligarch now accused of defrauding his country’s largest bank. The investigation, conducted in collaboration with BuzzFeed News and more than 100 other media partners around the world, revealed that Deutsche Bank was one of a number of global banks that kept profiting from powerful and dangerous players even after U.S. authorities issued fines for failures to stem flows of dirty money.

“We are a different bank now,” Deutsche Bank told ICIJ in response to the FinCEN Files story.

In addition to the bribery charges, prosecutors last week accused Deutsche Bank of committing fraud by intentionally manipulating prices of precious metals over a five-year period. The bank admitted to wrongdoing in last week’s settlement, which encompasses both the bribery and commodities fraud allegations.

The settlement hinges on the German bank agreeing to a three-year deferred prosecution agreement, a probation-like period after which prosecutors can drop the criminal charges. This agreement includes requirements for Deutsche Bank to fix its systems aimed at stopping bribery and other wrongdoing within the company.

In recent years, such agreements have become a key way for big banks to avoid criminal penalties for financial misconduct. Critics have questioned whether the agreements fail to deter bad behavior by financial firms and large corporations.

This is the latest penalty imposed on Deutsche Bank, which has paid hundreds of millions of dollars in penalties in recent years for anti-money laundering lapses. Past breaches include moving suspicious payments for convicted sex offender Jeffrey Epstein after it deemed him to be a high-risk, and transferring billions on behalf of Iranian, Libyan, Syrian, Burmese and Sudanese financial institutions and other entities sanctioned by the U.S.

Deutsche is one of the five banks to appear most often in the FinCEN Files, including Bank of New York Mellon, Standard Chartered, JPMorgan and HSBC. The investigation found that all five institutions repeatedly broke their official promises of good behavior by continuing to move cash for suspect people and companies.

In response to the deferred prosecution agreement last week, Deutsche Bank again tried to distance itself from its recent past. “We take responsibility for these past actions, which took place between 2008 and 2017,” Dan Hunter, a Deutsche Bank spokesman, told The New York Times. Hunter added that the bank was determined “to put these matters firmly in the past.”
International Consortium of Investigative Journalists
written by Simon Bowers
Friday October 16, 2020

Prosecutors fined the bank $15.8 million for its failure, on more than 600 occasions, to promptly submit reports that would have alerted criminal investigators to suspicious transactions.

German prosecutors have abandoned their criminal investigation into staff at Deutsche Bank suspected of helping launder dirty money from Russia and neighboring countries through the tiny Estonian branch of Denmark’s largest lender, Danske Bank.

A year after carrying out raids on Deutsche Bank offices, Frankfurt-based prosecutors said this week that there was insufficient evidence to pursue charges against individuals at Deutsche Bank. Instead, they imposed a fine of $15.8 million on the German bank for its failure, on more than 600 occasions, to promptly submit reports that would have alerted criminal investigators to suspicious bank transactions.

The fine is equivalent to just 0.06% of the $26.4 billion total net revenues Deutsche Bank generated in 2019.

The penalty marks the second regulatory action against Deutsche Bank over its controversial relationship with the now notorious Estonian branch of Denmark’s Danske Bank. The first fine was imposed by New York regulators in July.

More substantive fines may be yet to come as the U.S. Department of Justice continues to investigate Deutsche Bank. It too is reportedly interested in the German bank’s decision to process tens of billions of dollars in suspect payments for shell-company clients of Danske Estonia over many years.

Two years ago, a report by Danish law firm Bruun & Hjejle, commissioned by Danske Bank, found that the bank’s Estonian branch had been at the center of Europe’s largest ever money laundering scandal. The bank washed $230 billion in likely dirty money into and out of accounts that were controlled, through anonymous shell companies, by thousands of secretive figures in Russian and other former Soviet republics and satellite states.

Of that sum, suspicious payments in U.S.dollars totaling more than $150 billion were processed through New York by the U.S. arm of Deutsche Bank, according to American regulators.

As a result, New York’s Superintendent of Financial Services Linda Lacewell in July imposed a fine on Deutsche Bank of $150 million, though this penalty covered two other, unrelated violations too.

“Deutsche Bank failed to take appropriate action to prevent Danske Estonia from transferring billions of dollars of suspicious transactions through Deutsche Bank accounts in New York,” Lacewell said.

The closure of the German criminal investigation into bank staff comes in spite of detailed revelations about Deutsche Bank’s relationship with Danske Estonia in the FinCEN Files, a global investigation by the International Consortium of Investigative Journalists and 109 media partners.

The FinCEN Files is a cache of classified documents largely made up of more than 2,100 suspicious activity reports, secretly sent by banks to a unit of the U.S. Treasury Department called the Financial Crimes Enforcement Network, or FinCEN. Obtained by BuzzFeed News, and shared with ICIJ and media partners, the FinCEN Files detail suspect money flows of more than $2 trillion between 1999 and 2017.

The FinCEN Files documents show that, for many years, Deutsche Bank secretly had suspicions about the transactions it processed in the U.S. on behalf of anonymous shell-company clients of Danske Estonia.

In February 2019, as regulatory scrutiny of Danske Estonia increased, Deutsche Bank had quietly sent more than one million suspicious activity reports to the German regulator, flagging concerns about past transactions involving Danske Estonia clients which it belatedly judged to be of potential interest to the police.

Later in 2019, Frankfurt prosecutors carried out a raid on Deutsche Bank’s offices looking for evidence that the German bank’s staff had colluded in the laundering of dirty money for the clients of Danske Estonia.

Welcoming this news that this investigation has now been dropped, Stefan Simon, a member of Deutsche Bank’s management board, said in a statement, “It is clear that there was no evidence of criminal misconduct either on the part of Deutsche Bank or its employees.”

Meanwhile, in Estonia, investigations into former staff at Dankse Bank continue. Two years ago, prosecutors named nine former Danske Bank staff as suspects in a criminal investigation into money laundering at the bank. Since then, two additional former staffers were named and prosecutors said their inquiries had widened to ten specific crimes which they believe generated more than $2 billion in dirty money that was washed through Danske Estonia.

Despite dropping their criminal investigation, German prosecutors confirmed that, between 2007 and 2015, Deutsche Bank had played a central role in processing suspicious payments into and out of accounts at Danske Bank’s Estonian branch held in the name of thousands of anonymous shell companies, often registered in the United Kingdom.

The ultimate owners of these shell companies were based in Russia and other former Soviet republics and satellite states, the prosecutors said, echoing the findings of U.S. regulators.

An ICIJ analysis found 3,267 anonymous U.K. shell companies in the FinCEN documents, each linked to one or more suspicious transactions. Of these, most held accounts at Danske Estonia or another bank in the Baltic region.

ICIJ found that some of these shell companies filed false financial statements at Companies House, the U.K. company registry. Others were registered to residential addresses where the occupant denied knowledge of them. Others were set up and run by straw men and women with no knowledge of the companies’ true activities or owners.

In response to FinCEN Files findings, Mel Stride, a U.K. member of parliament and chair of the influential Treasury Select Committee, has written to government ministers and regulatory agencies asking why so many U.K. companies feature in the suspicious activity reports obtained by journalists and why the U.K. is viewed as “higher risk” for money laundering by the U.S. Treasury Department.

In the United States, FinCEN Files revelations prompted Linda Lacewell, the New York regulator who fined Deutsche Bank in July, to write an outspoken op-ed article detailing how, in her view, money laundering had to “metastasize” inside the banking system and wrap itself “within the guts of financial institutions.”

“Banks say they did not actually know the money was criminally derived, yet they have been permitting massive transactions to run through shell companies to money laundering havens, with no apparent business purpose, notifying the [FinCEN] and taking their cut in fees,” she wrote.

“Individual bankers are rarely held accountable, so money laundering becomes a source of profits and bank fines become a cost of doing business. When the profits exceed the fines, the business choice is easily corrupted.”

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