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Deutsche Bank's Compliance Failings and 5MLD

Author: Nicola Sharp  22 December 2019

Deutsche Bank has been fined for shortcomings relating to money laundering and tax evasion. Nicola Sharp of Rahman Ravelli believes any such failings need addressing before the January arrival of the EU’s Fifth Anti-Money Laundering Directive.

Prosecutors in Frankfurt have dropped an investigation into two Deutsche Bank employees accused of aiding tax evasion through a former Virgin Islands unit - but the bank has been fined for failings in compliance.

In a 2018 raid, 170 police officers investigating allegations of tax evasion and money laundering searched Deutsche Bank’s Frankfurt headquarters. The Frankfurt prosecutor’s office has now closed the investigation into the two employees due to a lack of evidence. But the bank has been fined 15 million euros for shortcomings in its compliance and its filing of suspicious activity reports.

The investigations were linked to activity involving offshore entities created by Deutsche Bank’s Virgin Islands subsidiary, Regula Ltd. This was sold by Deutsche Bank in March 2018.

The prosecutor’s office stated that the fines were imposed for a failure to promptly report suspected money laundering related to Regula. It cited inadequate oversight and understaffing of the bank’s anti-money-laundering team from 2015 until 2018.

Such shortcomings have to be addressed with the European Union’s Fifth Anti-Money Laundering Directive (5AMLD) coming into force on January 10 2020.

5AMLD amends the Fourth Anti-Money Laundering Directive in an attempt to improve the EU’s ability to prevent the financial system from being used for money laundering and funding of terrorist activities.

These amendments will:

  • Improve transparency by setting up publicly available registers for companies, trusts and other legal arrangements.
  • Enhance the powers of EU Financial Intelligence Units; providing them with access to more information to conduct investigations.
  • Restrict the anonymity related to virtual currencies, wallet providers and pre-paid cards.
  • Broaden the criteria for the assessment of high-risk countries and improve safeguards for financial transactions to and from such countries.
  • Lead to the creation of central bank account registries or retrieval systems in all member states.
  • Improve the cooperation and exchange of information between anti-money laundering supervisors and the European Central Bank.

 

Learn more about responding to a money laundering investigation by reading our guide: A Brief Summary Of Money Laundering And How To Respond To Allegations.

 

 

Nicola Sharp C 09983

Nicola Sharp

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Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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