Regulators have agreed penalties totalling $150m (£119m) with Deutsche Bank for alleged compliance failures in its dealings with the disgraced financier Jeffrey Epstein and two other banks.
The New York State Department of Financial Services (DFS) said the settlement amounted to the first enforcement action against a financial institution for its actions relating to Epstein’s financial dealings.
It detailed “hundreds” of transactions made by the billionaire – handled by the German bank between 2013 and 2018 – before he took his own life in a New York jail last summer while awaiting trial on sex-trafficking charges.
The DFS said they included payments to individuals who were publicly alleged to have been Epstein’s co-conspirators in sexually abusing young women, settlements of over $7m in total and also payments to Russian models.
“The bank failed to properly monitor account activity conducted on behalf of the registered sex offender despite ample information that was publicly available concerning the circumstances surrounding Mr Epstein’s earlier criminal misconduct,” the statement said.
The DFS described Deutsche’s failures in relation to Epstein as “substantive”.
Its penalty also related to the bank’s handling of Danske Bank Estonia, which is embroiled in a money laundering scandal, and Federal Bank of the Middle East.
Deutsche failed to properly monitor their correspondent and dollar clearing businesses, the regulator said.
The bank released an internal memo to staff by chief executive Christian Sewing that addressed the issues.
He told the bank’s workers it was a “critical mistake” to have taken Epstein as a client in 2013.
“We all have to help ensure that this kind of thing does not happen again,” he was quoted as saying.
It later released a public statement which admitted “mistakes” in its processes relating to Epstein.
The statement added: “While the settlement reflects our upmost cooperation and transparent engagement with our regulator, it also shows how important it is to continue investing in our controls and enhancing our anti-financial crime capabilities.
“To that end, we have invested almost $1bn in improving our training, controls and operational processes, and have increased our anti-financial crime team to more than 1,500 people. Our transformation and strengthening continues.”
The fallout from Epstein’s death has prompted a separate, criminal investigation by the FBI into an alleged network of abuse that culminated in his former girlfriend Ghislaine Maxwell being charged with aiding Epstein in trafficking young girls for sex.
Prince Andrew, who was introduced to the financier by Ms Maxwell, is being urged to talk to the US authorities and his representatives say he has repeatedly offered to do so.
He has strongly denied any suggestion of involvement in sexual abuse.
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