20 May 2019
Deutsche Bank managers blocked the filing of multiple suspicious activity reports (SARs) on transactions involving President Donald Trump, his son-in-law Jared Kushner and offshore parties, The New York Times reported Sunday.
In the summer of 2016, the German institution’s transaction monitoring software flagged a series of suspicious payments from Kushner’s real estate company to unnamed Russian individuals, the newspaper said. An anti-money laundering (AML) compliance officer subsequently drafted a SAR, in part because US regulators had previously penalized the institution for allowing billions of dollars to be laundered for Russian clients.
The draft SAR, which would typically be reviewed by AML experts who are independent of the business line in question, went instead to Deutsche Bank managers in New York who were part of the institution’s private banking operations, The New York Times said, citing the Tammy McFadden, the former compliance officer who drafted the report, and two unnamed former managers of the bank.
The New York managers ultimately rejected the draft SAR on the grounds that the concerns were “unfounded,” and declined to notify the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) of the flagged transactions, the individuals said.
McFadden, who claims she was fired after raising concerns about the institution’s practices, has since filed complaints with the US Securities and Exchange Commission on the bank’s AML enforcement, according to the report.
Following Trump’s inauguration in January 2017, Deutsche Bank’s Jacksonville, FL-based Special Investigations Unit produced multiple SARs linked to “different entities that Mr. Trump owned or controlled,” including limited liability companies and, in one case, transactions tied to the now-defunct Donald J. Trump Foundation, according to the report.
The bank again declined to submit the SARs to FinCEN—a decision that was unusual given that it covered a series of draft regulatory reports on a single high-profile client, three former employees said.
Two former employees familiar with the bank’s Jacksonville compliance division said that managers had separately barred compliance staff from filing SARs on companies tied to “prominent Russians,” seemingly because they feared the reports would upset important clients, the newspaper said.
The former bank employees said that the decision not to file the SARs reflects a “generally lax approach to money laundering laws” by the institution, which has in recent years faced a raft of compliance-related investigations.
“You present them with everything, and you give them a recommendation, and nothing happens,” McFadden told the newspaper. “It’s the D.B. way. They are prone to discounting everything.”
A spokeswoman for Deutsche Bank told the NYT that the institution had recently strengthened its AML controls, but that “at no time was an investigator prevented from escalating activity identified as potentially suspicious.”
“Furthermore, the suggestion that anyone was reassigned or fired in an effort to quash concerns relating to any client is categorically false,” she said.
A spokeswoman for the Trump Organization said that the company had no knowledge of flagged transactions at Deutsche Bank and the business had no operating accounts with the lender, according to the report.
“Any allegations regarding Deutsche Bank’s relationship with Kushner Companies which involved money laundering is completely made up and totally false. The New York Times continues to create dots that just don’t connect,” a spokeswoman for Kushner Companies told the newspaper.
The claims are not the first of their kind for the German lender.
Last month, Trump and members of his family sued Deutsche Bank in a bid to block the institution from complying with at least two congressional subpoenas seeking bank records on any suspicious activity involving the US president’s personal and business bank accounts since 2010.
That same month, the Guardian published a confidential audit report by the bank that concluded it could face “significant disciplinary action” for processing payments linked to a Russian money laundering network that moved around $80 billion in suspicious funds between 2010 and 2014.
In January 2017, US and UK authorities fined the bank $629 million for failing to prevent a Russian money laundering scheme that transferred $10 billion out of Russia through so-called “mirror trades.”
Shortly after a whistleblower accused Deutsche Bank of processing payments related to a separate Russian money laundering network in 2018, German authorities raided the lender’s headquarters as part of a probe stemming from the Panama Papers leaks.
Deutsche Bank’s recent compliance troubles, which have extended beyond its AML program, have prompted shareholders to openly question the institution’s leadership.
US proxy advisor Institutional Shareholder Services, or ISS, has recently recommended that the bank’s investors not ratify the performance of its top managers during an annual shareholder meeting scheduled to be held later this week, according to Reuters. Last month, investor Riebeck-Braueri said it intended to file a motion to oust Deutsche Bank chairman Paul Achleitner at the meeting, according to the news agency.
Count reading this article to your CPD minutes, by signing up to our CPD WalletFREE CPD Wallet