German watchdog calls for Deutsche Bank to crack down on money laundering
Germany’s financial regulator, BaFin, has called on sector giant Deutsche Bank (DB) to take action against money laundering and terrorist financing, appointing a special auditor to monitor its progress.
In a statement, BaFin called on the bank to adopt “appropriate internal safeguards” and “comply with general due diligence obligations”. It said it had appointed a “special representative” to “report on the implementation progress and evaluate it”.
It is the first time a special auditor has been appointed to monitor a German lender. BaFin’s statement did not contain additional information about the timeframe for the process.
EU and state regulators monitor and develop legislation to try and prevent bank services being used for illegal activities, of which money laundering a terrorism financing are the most prominent. Know your customer (KYC) regulations are used by banks to verify customers as a measure against fraud and have become a core part of global anti-money laundering practices.
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In August, Reuters reported that DB had uncovered shortcomings in its ability to fully identify clients and the source of their wealth, citing internal documents. In January 2017, the bank agreed to pay US and UK regulators $630m (£479.7m) over artificial trades that had been used to launder $10bn out of Russia. It was hit with a further $41m fine from the US Federal Reserve later that year over failings in its money-laundering detection services.
In a statement, DB said: “We have the strong commitment to operate within regulatory compliant practices for the identification of our clients (KYC). We are in agreement with the BaFin that we have to improve these processes in the Corporate & Investment Bank further. The bank will work together with the BaFin and the special auditor KPMG to fulfill the regulatory requirements as soon as possible and within the given time frame."