It’s not the first time that Deutsche Bank has gotten itself into a pickle. The German police raided the bank’s headquarters located in Frankfurt, Germany, as well as its offices in several other locations. The raid was part of an investigation into revelations contained in the Panama Papers that indicated that the bank was involved in money laundering. The leaks also revealed that it worked through a subsidiary based in the British Virgin Islands, a popular destination for nefarious, money-laundering activities.
A police van was noticed in front of the Deutsche Bank AG headquarters during a raid by local police on the 29th of November. A German federal prosecutor said that two Deutsche Bank employees are suspected to have had a hand in the illegal activities, by helping clients set up offshore companies to launder money. Although diverting money through foreign companies does not necessarily constitute money laundering, prosecutors made a claim that the employees in question are the subject of allegations because they had not reported their suspicions of customers involved in money laundering and tax evasion, earlier.
What Led to The Fallout – The Panama Papers?
In a statement released by Deutsche Bank authorities, it confirmed that this case was related to the Panama Papers leak that took the world by storm. The Panama Papers were published in April of 2016, by an international group of journalists using the archives of the Panamanian law firm named Mossack Fonseca. The documents revealed that billions of dollars were being diverted by offshore companies in a bid to avoid taxes and other regulations. Numerous high-profile politicians, corporations and celebrities from around the world were named in the scandal. The leak also led to several high-level resignations. Criminal investigations related to the Panama Papers are still ongoing in several countries around the globe, including Germany.
Not the first time in trouble
Deutsche Bank has been in the news for several money laundering allegations in recent years. There were allegations that indicated that it could’ve played a role in the laundering of around $150 billion of Russian money by the Estonian branch of Danske Bank between 2007 and 2015. US regulators have also begun investigations into Deutsche Bank’s role in one of the world’s biggest money laundering scandals in the recent past. Regulators from around the world have been criticizing Deutsche Bank for its lax regulatory rules for quite some time now. In January 2017, regulators from both the US and the UK imposed a fine of $ 630 million on it for laundering Russian currency through what are known as “mirror transactions”. Also, in 2017, the Federal Reserve added the entire US operations of Deutsche Bank to its watch list, for their alleged financial, managerial and operational weaknesses, which posed a serious threat to the bank’s survival. In September of 2018, the German regulator BaFIN imposed an order on the Deutsche Bank, by which it was mandated to drastically improve its anti-money laundering controls.
Authorities Criticized for Lax Control
Sylvie Matherat, the regulator of the bank, has been blamed for not having cleaned up its regulatory complacency. Having joined the bank in 2014, there are a lot of doubts with regards to her role in the bank’s malpractices. However, the latest revelations indicating that the 300 million euros that had been transferred via the British Virgin Islands subsidiary took place in 2016, could mean that she did have a part to play. But it is not only Matherat, who has to be worried about recent events, ever since the bank’s share price fell by close to 50% this year. The bank’s profit margins have been quite sparse in recent times. Deutsche Bank CEO, Christian Sewing, also hasn’t been able to develop any strategies capable of handling the bank’s recent decline in terms of market value and public opinion. The way things are poised, the bank’s future seems undoubtedly bleak.