DWS Investment Management Americas has been charged by the SEC in two separate enforcement actions, leading to a settlement of $25m.
The actions revolve around failures in Anti-Money Laundering (AML) programmes and misstatements related to its Environmental, Social, and Governance (ESG) investment process.
The SEC’s order unearthed that DWS, while advising mutual funds with billions in assets, failed to ensure the establishment of a tailored AML programme to meet specific risks as per the law. This lapse led to a deficiency in adopting and implementing policies and procedures designed to detect activities indicative of money laundering.
SEC’s Division of Enforcement Director Gurbir S. Grewal stated, “The SEC’s order finds that DWS advised mutual funds with billions of dollars in assets yet failed to ensure that the funds had an AML program tailored to their specific risks, as required by law.” He further emphasized the importance of establishing and implementing individualised programmes to prevent money laundering and terrorism financing.
Additionally, DWS faced charges for making materially misleading statements regarding its ESG investment process. Despite marketing itself as a leader in ESG and claiming to adhere to specific policies for integrating ESG considerations into its investments, the SEC found that from August 2018 to late 2021, DWS did not adequately implement certain provisions of its global ESG integration policy.
Deputy Director of the SEC’s Division of Enforcement and head of its Climate and ESG Task Force, Sanjay Wadhwa, remarked, “Here, DWS advertised that ESG was in its “DNA,” but, as the SEC’s order finds, its investment professionals failed to follow the ESG investment processes that it marketed.”
Without admitting or denying the SEC’s findings, DWS has agreed to a cease-and-desist order and to pay a penalty, divided as $6m for the AML action and $19m for the ESG misstatements action.
The investigation was spearheaded by the Enforcement Division’s Asset Management Unit (AMU), with the AML investigation conducted by a team led by Janene M. Smith and the ESG misstatements investigation by HelenAnne Listerman and Jessica Neiterman.
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