BaFin Threatens Deutsche Bank of Fines Over Weak AML Controls

Richard Marley

November 07, 2022

Germany’s Financial Watchdog BaFin is not satisfied with the efforts of Deutsche Bank AG to control dirty-money flows and has warned the bank of fines if it doesn’t implement AML controls within a set deadline.

The regulator BaFin claimed that on September 28 it instructed Deutsche Bank to take particular steps to avoid money laundering and terrorism funding in order to fulfill requirements that BaFin made in 2018 and 2019. The regulator threatened to impose penalties in case the bank doesn’t follow the regulations.

The regulator revealed it was still disappointed with the progress of a monitor it had appointed in 2018 to oversee implementation. Deutsche Bank must meet its deadlines by the mid of 2023.

There were no fresh findings in the most recent order, according to a bank spokesman. “We are fully aligned with the BaFin on the necessary measures and have already completed a large proportion of them,” he added.

The most recent warning from BaFin puts extra pressure on CEO Christian Sewing, who has worked to steer the bank out of controversies and concentrate on its business.

It claimed a surge in third-quarter profit the previous week due to better lending conditions brought about by increased interest rates.

Costs, however, continue to be a challenge, partly as a result of the bank’s large investment in strengthening internal controls.

Additionally, Deutsche Bank has trackers in place as a result of a 2017 agreement with New York state regulators about “mirror trades,” when the bank transferred $10 billion in customer funds from Russia outside of the jurisdiction.