Jeffrey Epstein court hearing
© Palm Beach Post/TNS/Sipa USA/PAJuly 30, 2008 photo of Jeffrey Epstein (center) in court in West Palm Beach. He would plead guilty to a single charge of soliciting prostitution.
New York's Department of Financial Services said in a statement on Tuesday it had imposed the penalty on Deutsche Bank's New York branch for "significant compliance failures in connection with the Bank's relationship with Jeffrey Epstein," the accused child sex trafficker who died in police custody last year. New York's Department of Financial Services said in a statement on Tuesday it had imposed the penalty on Deutsche Bank's New York branch for "significant compliance failures in connection with the Bank's relationship with Jeffrey Epstein," the accused child sex trafficker who died in police custody last year.

The penalty also covers anti-money laundering failings linked to Danske Bank Estonia and Cyprus-based bank FBME.

The settlement brings to an end three investigations by the regulator into compliance failings at the German banking giant.

It also marks the first enforcement action by a financial regulator linked to the Epstein case.

Epstein, who is believed to have been a billionaire, became a client of Deutsche Bank's in 2013, five years after he pleaded guilty to procuring for prostitution a girl below the age of 18 in Florida.

Despite coverage of the settlement and subsequent allegations against Epstein, investigators found Deutsche Bank failed to properly monitor his account. "Hundreds of transactions totalling millions of dollars" that raised red flags were missed, the New York Department of Financial Services said.

These included payments to Epstein's alleged co-conspirators, settlement payments with victims totalling $7m, payments to Russian models, payments for women's school tuition and expenses, and payments to "numerous women with Eastern European surnames" that were "consistent with public allegations of prior wrongdoing."

Repeated "suspicious" cash withdrawals by Epstein — totally over $800,000 over four years — also failed to raise concerns.
Deutsche Bank Christian Sewing Epstein
© Natasha Livingstone/APDeutsche Bank chief executive Christian Sewing: Working with Epstein was 'a critical mistake and should never have happened'.
"Despite knowing Mr. Epstein's terrible criminal history, the Bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions," New York's Superintendent of Financial Services Linda A. Lacewell said in a statement.

A spokesperson for Deutsche Bank said the bank "deeply" regretted its association with Epstein and said over $1bn has been invested in "training, controls and operational processes".

In a memo sent to staff on Tuesday and shared with journalists, Deutsche Bank chief executive Christian Sewing said working with Epstein was "a critical mistake and should never have happened."

"We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes, and have learnt from our mistakes and shortcomings," the spokesperson for Deutsche Bank said.

"Immediately following Epstein's arrest, we contacted law enforcement and offered our full assistance with their investigation. We have been fully transparent and have addressed these matters with our regulator, adjusted our risk tolerance and systematically tackled the issues."
Danske Banke
© Francis Dean/Corbis via Getty ImagesDanske Banke
The $150m penalty also covers two separate investigations into Deutsche Bank's relationship with Danske Bank Estonia and FBME Bank.

Danske Bank's Estonia branch was found in 2017 to be at the heart of possibly the biggest money laundering scandal in history. An estimated €200bn of suspicious transactions were discovered moving money out of Russia and former Soviet states.

Deutsche Bank acted as a correspondent bank for Danske Bank, helping it handle US dollars. Internally, Deutsche Bank gave Dankse's Estonia branch its highest possible risk score as early as 2010, due to the volume of suspicious transactions flowing through the Estonia branch. However, it kept dealing with the bank.

In total, Deutsche Bank processed $267bn-worth of transactions on behalf of Danske Bank Estonia between 2007 and 2015, including $150bn from Russia and other former Soviet states.


Comment: Interesting. Was the author unaware of fraudster Bill Browder of Magnitsky Act infamy being the chief architect of the crime, or was he carefully avoiding the connection?

In the case of FBME, the regulator's investigation found Deutsche Bank raised concerns about transactions involving an offshore company ultimately found to be owned by "a Russian businessman who was affiliated with a Syrian research facility responsible for developing and producing non-conventional weapons". Deutsche Bank was unaware of this at the time.

However, Deutsche Bank did not stop dealing with FBME until it was named "a foreign financial institution of primary money laundering concern" in 2014 by the US Treasury.

A spokesperson for Deutsche Bank said there was "no intentional effort by anyone within the bank to facilitate unlawful activity" in either case.

"Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system, and it is fundamental that banks tailor the monitoring of their customers' activity based upon the types of risk that are posed by a particular customer," Superintendent Lacewell said.

"In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the Bank itself deemed to be high risk."