The US Federal Reserve imposed the fine based on the bank’s failure to adhere to anti-money laundering and sanctions controls and its inadequate progress in remedies under the 2015 and 2017 consent orders
US Federal Reserve fines Deutsche Bank. (Credit: Marc Rentschler on Unsplash)
The US Federal Reserve has issued a consent order and imposed a $186m fine on Germany-based Deutsche Bank, its New York branch, and other US affiliates.
In addition, the regulator announced a Written Agreement to address other shortcomings in the bank’s governance, risk management, and controls.
The German lender was fined for its violations of the regulator’s 2015 and 2017 consent orders related to sanctions compliance and anti-money laundering controls.
According to the US Federal Reserve, Deutsche Bank made insufficient remedial progress under the 2015 and 2017 consent orders.
The bank had weak internal controls and governance processes against money laundering, with respect to its prior relationship with the Estonian branch of Danske Bank.
Deutsche Bank, in its statement, said: “We are committed to maintaining robust risk management programs with a special emphasis on Anti-Financial-Crime and Compliance controls.
“The Written Agreement and the Consent Order with the Federal Reserve relate to our historic tardiness in adhering to older enforcement actions and agreements, as well as a correspondent banking relationship we exited in 2015.
“We appreciate that the Federal Reserve recognises the progress we have made in recent years in remediating and resolving control weaknesses.”
In its consent order, the US Federal Reserve ordered the German bank to prioritise the completion of several critical requirements of the Board.
Deutsche Bank said that it has taken several actions, including extensive enhancements to its client due diligence and transaction monitoring.
Also, it has significantly invested in its internal controls since 2019, to enhance the effectiveness and size of its Anti-Financial Crime team by more than 25%, to more than 2,000 employees.
The bank added: “We also recognise that these actions reinforce the need to ensure we stand by our commitments and close our remediation obligations in the near future.
“Given the momentum we have built in the last two years, we believe we are well-positioned to meet our regulators’ expectations.
“The imposed fine is in large part covered by provisions taken in previous quarters, with the remainder being within the bank’s published cost guidance for the second quarter.”