WASHINGTON – The Federal Reserve and state regulators have ordered the U.S. banking operation of Deutsche Bank (DB), Germany's largest bank, to take steps to prevent money laundering after finding deficiencies in its controls.
The Fed and the New York State Banking Department on Friday announced an agreement with New York-based Deutsche Bank Trust Co. Americas, which was not fined under the accord.
Under the agreement dated Wednesday, the bank promised to tighten its policies and procedures and its reporting of suspicious transactions and customer vetting to prevent money laundering.
Much of the problem was found to involve its correspondent banking services.
Correspondent banking is a lucrative activity in which banks provide each other services such as moving funds or exchanging currency. Investigators have found that some large banks that engage in correspondent banking, including several U.S. institutions, have become conduits for illicit foreign money and unwittingly aided drug trafficking, fraud and other crimes.
Deutsche Bank spokesman Ted Meyer confirmed the bank's commitment to strengthen controls. "There have been no findings of money laundering, and the bank remains committed to a rigorous anti-money laundering compliance program," he said in a statement.
It was the latest in a recent series of moves against banks by regulators concerned about money laundering at financial institutions in the United States. Last year, a Treasury Department agency fined Washington-based Riggs Bank (RIGS) a record $25 million for its handling of millions of dollars in embassy and other foreign-held accounts.
And Arab Bank PLC, one of the biggest financial institutions in the Middle East, agreed in August to pay a $24 million fine for allegedly inadequate controls against money laundering at its New York branch. Jordan-based Arab Bank faces several lawsuits in the United States by relatives of terrorism victims in Israel who allege it supported terrorism by funneling donations to Palestinian suicide bombers and their families.
Deutsche Bank was one of 11 major international banks that responded to global pressure in October 2000 by adopting voluntary measures to fight the spread of money laundering and weed out drug traffickers, dictators and other undesirable customers.