From: RegTech Analyst
Deutsche Bank slammed with $150m fine for failing to make its relationship with convicted sex offender Jeffrey Epstein clear.
The New York State Department of Financial Services (DFS) said that the bank had agreed to pay the regulator a $150m fine for “significant compliance failures” in connection with its relationship with Epstein and correspondent banking relationships with Danske Bank Estonia and FBME Bank.
“Banks are the first line of defence 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,” said Linda A. Lacewell, superintendent at DFS.
“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.
“In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein’s terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions.”
The DFS said that the bank failed to properly monitor account activity conducted on behalf of Epstein despite ample information that was publicly available concerning the circumstances surrounding his earlier criminal misconduct.
Subsequently, the bank processed hundreds of transactions totalling millions of dollars that the regulator said would have called for more scrutiny.
The regulator added the bank also made a “series of procedural failures, mistakes and sloppiness” in how it oversaw Epstein’s accounts. It noted that Deutsche Bank’s own reputational risk committee had imposed conditions on how Epstein’s accounts were managed, which were not followed.
In the cases of Danske Bank Estonia and FBME, the DFS concluded that Deutsche Bank failed to properly monitor the activities of their foreign bank clients with respect to their correspondent and dollar clearing business.
Epstein was a well-known socialite who developed an elite social circle to which he procured women, including underage girls, who were then sexually abused by himself and his contacts.
Having served a prison sentence in 2008 for procuring an underage girl for prostitution and of soliciting a prostitute. He was arrested again in July 2019 on sex trafficking charges. He died in his jail cell two months later.
His long-time associate Ghislaine Maxwell was arrested in July 2020, charged with enticement of minors, sex trafficking of children and perjury.
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