Police Again Search Deutsche Bank HQ In Money Laundering Probe

by Ike Obudulu Posted on November 30th, 2018

Frankfurt, Germany:  Police searched Germany’s largest bank, Deutsche Bank AG (DBKGn.DE), headquarters in Frankfurt for a second day on Friday over money laundering allegations linked to the Panama Papers and shares in the company fell to a record low.

The large volume of material being examined meant a search started on Thursday was still going on, a spokeswoman for the Frankfurt prosecutor’s office said, adding that offices of board members were included but without giving further details.

Deutsche, Germany’s biggest lender, said on Thursday it was cooperating with investigators and declined further comment on Friday. Deutsche Bank traded down 2.5 percent at 1040 GMT and have lost around half of their value this year.

The raid comes as Deutsche Bank tries to repair its tattered reputation after three years of losses and a list of financial and regulatory scandals.

Christian Sewing, appointed chief executive in April to help the bank rebuild, has trimmed its U.S. operations and reshuffled its management board, but revenue has continued to slip.

Investigators are looking into the activities of two unnamed Deutsche Bank employees, as well as “other not yet identified culprits”, alleged to have helped clients set up offshore firms to launder money, the prosecutor’s office has said. The inquiries focus on events from 2013 to this year.

Two Deutsche Bank employees, as well as “other not yet identified culprits” are believed to have assisted customers in establishing shell corporations in tax havens and subsequently transferring funds derived through crime onto German accounts of the bank.

An entity associated with DAX-listed institute in the British Virgin Islands is believed to have assisted more than 900 customers in such transactions with a volume of 311 million euros (353 million U.S. dollars) since 2016 alone.

The offshore activity in question was not flagged to government authorities as being suspicious. As a consequence, the suspects are accused by prosecutors of having neglected their fiduciary duty to report on potential money laundering offenses although there was sufficient evidence to suggest criminal behavior on behalf of clients.

A spokesperson for the local state prosecution office confirmed that the raid was prompted by suspected money laundering offenses which were identified in the wake of the so-called “Offshore-Leaks” and “Panama Papers” scandals.

The prosecutor said on Thursday the investigation had been triggered after investigators reviewed information in the Panama Papers, consisting of millions of documents from Panamanian law firm Mossack Fonseca leaked to the media in April 2016.

Around 170 police officers, prosecutors and tax inspectors began the raid on Thursday, seizing written and electronic documents, though only one police car was visible outside the bank’s headquarters early on Friday.

This week’s events raise the stakes of a regularly scheduled meeting of the bank’s supervisory board planned for Dec. 4.

Deutsche Bank’s controls that aim to prevent money laundering have caught the attention of regulators on both sides of the Atlantic.

On Thursday, as the raids were ongoing, the vice chairman of supervision for the U.S. Federal Reserve, Randal Quarles, met Deutsche Bank management for an unrelated and previously scheduled appointment at the bank’s headquarters, a spokesman for the Fed said.

Deutsche Bank, Germany’s largest financial institute, has posted heavy losses during past years as a spat of legal scandals and falling investment banking revenue weighed on its earnings. During the recent presentation of third quarter (Q3) figures, chief executive officer (CEO) Christian Sewing expressed confidence that ongoing corporate reforms were finally beginning to bear fruit as a “new discipline” in the bank took hold.

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