Deutsche leaders were warned of control lapses

Bloomberg

Deutsche Bank AG’s top leaders were warned multiple times about serious compliance failures that exposed the bank to money launderers, a news investigation shows.
The supervisory board and committees that included Chairman Paul Achleitner were informed in 2013 and 2014 of anti-money laundering problems on at least three occasions, according to a BuzzFeed News story. Presentations at the time showed how bank was struggling to vet its clients and facing technology as well as staffing issues for its compliance team, BuzzFeed wrote.
The report raises fresh questions how much the bank’s top leadership knew about issues such as the mirror trade scandal in Russia, which allowed clients there to move billions of dollars out of the country
between 2011 and 2015 while circumventing anti-money laundering controls. Deutsche Bank has since invested heavily in boosting oversight, cut down its operations in Moscow and settled probes into the matter with US and UK regulators. An inquiry by the US Department of Justice is ongoing.
Many of the bank’s compliance and regulatory issues occurred before Achleitner took over in 2012, allowing him so far to avoid being dragged into the worst of the issues. He’s changed CEOs several times and presided over a period in which the bank paid billions to settle probes and pledged to improve internal controls.
The issues raised in report “have already been investigated and led to regulatory resolutions in which the bank’s cooperation and remediation was publicly recognised,” a Deutsche Bank spokesman said in an email
that didn’t comment directly
on Achleitner’s involvement. “We have devoted significant
resources to strengthening our controls and we are very focused on meeting our responsibilities and obligations.”
BuzzFeed also reported that a team from Deutsche Bank’s audit division conducted a review of the Moscow operation in 2014 and gave the office a “green” rating. Christian Sewing, now the bank’s chief executive officer, was global head of audit at the time, though he had no “direct or indirect involvement” in that probe, a Deutsche Bank spokesperson told BuzzFeed.
Sewing oversaw an internal investigation of the mirror trades the following year, which led to the lender shuttering its securities unit in the country. Achleitner appointed him CEO three years later.
The bank later published a memo on its internal website that detailed Sewing’s responsibilities and actions at the time. Sewing “immediately” initiated the internal investigation when the problem at the bank’s Russian operations “surfaced in 2015 in its whole dimension,” the bank wrote in the memo.
“The insinuation that he was responsible for the late uncovering of the mirror trade business are constructed and false,” it said.
BuzzFeed wrote that the volume of Russian money flowing into the U.S. financial system was so big that a team of experts at Bank of America raised the issue at a meeting with Deutsche Bank in London in early 2016. The issue was eventually escalated within Bank of America and one of its senior managers raised the issue with Achleitner himself. Bank of America in February of that year filed a suspicious activity report with the U.S. Treasury Department.
Deutsche Bank in a statement cast doubt over some elements of that report, saying in Germany’s two-tier board system, it wouldn’t have been the role of the supervisory board chairman to get involved in the matter. Instead, it was the chairman of the management board — John Cryan at the time — who had a meeting with a Bank of America executive.
“It would not have been the place of Paul Achleitner to get involved in managing the interactions with Bank of America, nor do we have any record of him doing so,” a Deutsche Bank spokesman said by email. “The Supervisory Board diligently exercised its oversight responsibility with regards to the mirror trading matter and potential money laundering in connection with Russia. Consequences have been taken where and as appropriate, including on the management board level.”