Deutsche Bank just can't get a grip on its money laundering controls. Reports of a further rebuke from the U.S. Federal Reserve on the subject put pressure on the bank's share price at the start of the week, which had recently been performing well. Above all, investors are worried about new sanctions in America. The bank's shares fell by almost 2 percent in early trading, significantly underperforming the overall Dax index, which was only 0.2 percent lower.
The Wall Street Journal and Bloomberg news agency had reported over the weekend that the Federal Reserve (Fed) had found in its annual assessment that the bank continued to have shortcomings in risk management and compliance. Sanctions, including hefty fines, were possible, they said. Deutsche Bank declined to comment on the reports.
The bank had already received similar rebukes on a number of occasions, and CEO Christian Sewing regularly vows to do better, as he did just last week at the Annual General Meeting. In the person of Christiana Riley, the bank had only appointed a board member specifically for the Americas business at the beginning of 2020. Her primary task is to improve relations with the regulatory authorities. Because the regular complaints from the Fed are not only bad for the image, but also cost the bank money again and again.
In Germany, too, the bank continues to come under closer scrutiny from financial regulators. Just a few weeks ago, it came to light that Bafin, too, is making far too slow progress in improving internal control systems to combat money laundering. The mandate of KPMG, the special watchdog appointed by the regulator in 2018, was therefore extended once again and even expanded.
Against this background, it is understandable that Bank CEO Christian Sewing has just reorganized responsibilities in the fight against financial crime. On the Board of Management, Stefan Simon took over responsibility for this area from Chief Risk Officer Stuart Lewis in May. The bank's previous chief anti-money laundering officer, Stefan Wilken, was removed. His duties were taken over by the previous head of the U.S. legal department, Joe Salama.
At last week's Annual General Meeting, Sewing admitted: "In the screening of our customers and especially in the daily monitoring of payment flows, we are not yet fully meeting the demands of our supervisors."
Image by Leonhard Niederwimmer