23 May 2019
Democratic senators on Tuesday questioned a US official about his bureau’s scrutiny of Deutsche Bank in light of a report alleging that the lender withheld regulatory filings linked to President Donald Trump.
In a hearing on beneficial ownership regulations by the Senate Banking Committee, Democratic lawmakers repeatedly asked the director of the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), Kenneth Blanco, about how his bureau intended to respond to The New York Times story.
Blanco declined to directly address the allegations, citing longstanding US Treasury Department policy, and said he had been briefed on the matter but had not yet read the report.
“I think you’re a very smart man,” responded Sen. Bob Menendez (D-NJ). “It wouldn’t take very long to read it, but it might be very informative to you.”
Menendez went on to exhort FinCEN to follow up on the allegations, adding that he would like to see US financial supervisors treat anti-money laundering (AML) infractions by banks as “breaking the law” rather than “the cost of doing business.”
The newspaper, which cited five current and former Deutsche Bank employees, said on Sunday that the German lender’s managers of its private banking operations in New York and other senior bankers declined to submit multiple suspicious activity reports (SARs) to FinCEN, despite efforts by AML compliance officers to file the regulatory forms.
One draft SAR cited a series of suspicious payments sent in mid-2016 from a real estate company controlled by Trump’s son-in-law Jared Kushner to unnamed Russian individuals, the news outlet said. The bank’s AML officers separately drafted multiple SARs the following year on “different entities” controlled by Trump, which like the draft report tied to Kushner were never forwarded to FinCEN, according to the report.
Deutsche Bank has an “abysmal record” of complying with US anti-money laundering statutes, Sen. Chris Van Hollen (D-MD) said on Tuesday.
“We have allegations from a whistleblower now that’s now on the record, and I would just point out that if FinCEN is not already in touch with that whistleblower, in my view, that’s gross negligence because the facts are already in plain sight,” Van Hollen told Blanco. “It’s essential, it seems to me, to the public and to the integrity of FinCEN, that these be actively pursued.”
Deutsche Bank has repeatedly denied claims that its senior managers blocked compliance staff from submitting the SARs.
The former Deutsche Bank employees cited by the newspaper said that the decision not to file the reports reflected a “generally lax approach to money laundering laws” by the institution, which has in recent years faced multiple compliance-related investigations. In 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.”
“You present them with everything, and you give them a recommendation, and nothing happens,” Tammy McFadden, a former Deutsche Bank AML specialist, told The New York Times. “It’s the D.B. way. They are prone to discounting everything.”
McFadden, who claims she was fired after raising concerns about Deutsche Bank’s practices, has filed complaints with the US Securities and Exchange Commission on the bank’s AML program.
During Tuesday’s hearing, multiple Democratic senators asked that FinCEN also prioritize preventing illicit finance tied to Russian efforts to interfere in the 2020 presidential election.
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