Deutsche Bank Raids: Senior Management in Scope
by: The Knowledge Group
German authorities have carried out multiple raids on the top managers at Deutsche Bank AG as they investigate a possible money laundering cover-up, Bloomberg and other sources report. CEO Christian Sewing is replacing members of the management board, yet the bank’s stock is plummeting.
Investigators have found disturbing documents among the Panama Papers indicating a British Virgin Islands firm – Regula Ltd., a subsidiary sold by Deutsche a month before Sewing became its head – let clients launder money.
In 2016, the International Consortium of Investigative Journalists helped obtain and publicize the Panama Papers from Panama-based Mossack Fonseca, the firm that devised shell companies for tax dodging. In the cache were millions of documents tracing the movement of wealth to offshore accounts, and among the account holders were hundreds of Deutsche Bank private wealth unit clients. The unit is a component of the private and commercial division that Christian Sewing ran prior to becoming CEO earlier this year.
One of two targeted suspects works in this unit, reportedly, whereas the other is employed in Deutsche Bank’s unit established to prevent financial crime.
Deutsche Bank states it is cooperating fully. Yet continued searches of top management indicate that the managers failed to sustain open communication lines with bank regulators. While the searches do not signal that the police have evidence against the members of the management board, investigators of white-collar crime will examine whether an entity’s leadership had or should have had knowledge of unlawful activities, or failed in its duties to avert wrongdoing.
Here, German prosecutors may have reason to believe top managers have not divulged all relevant information about a massive money laundering scheme.
Deutsche Bank’s legal troubles extend to U.S. enforcement actions. Last year, the Federal Reserve declared the bank must pay more than $150 million in civil fines over its conduct in foreign exchange markets, and for insufficient compliance safeguards before March 2016.
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