Deutsche Bank Role in Danske Bank Laundering

Compliance staff working for Deutsche Bank flagged at least $150 billions worth of transactions as potential money laundering transactions. According to the Bloomberg reports, these employees were not taken seriously and were asked to focus on their task. One of the ex-compliance officers revealed this information to Bloomberg who was involved in reviewing transactions that the bank’s U.S. subsidiary handled for a tiny Estonian unit of Danske Bank A/S.

Former compliance officer when working for Deutsche Bank sought broader scrutiny of certain clients but they got a familiar response from higher authorities “focus on the transaction in front of you, file your paperwork and move on”. Deutsche Bank was used as the corresponding bank by Danske and the US watchdogs have made number of enquiries with Deutsche Bank regarding the same.

Globally a significant number of Large Banks curtailed their corresponding banking relationships with the small banks in the wake of the money laundering risk. Large banks feared that they would be punished for the sins of the customers of other banks. JP Morgan Chase exited the Danske relationship in 2013, followed by Bank of America in 2015, however Deutsche’s U.S. subsidiary kept handling Danske’s business after competitors quit the business of Danske.

KYCC Importance for Deutsche Bank

Failure of the correspondent banking relationships lead to the need of knowing the customers’ customer (KYCC). It helps to understand the risks. KYCC takes those requirements to the next level and look at who your customers are doing business with, their sources of funds and its legitimacy, and the risk that these third parties are laundering money. Regtechtimes have built the reports on the Non-Banking Finance Company portfolio of the banking companies, where it helps the banks to understand the customers of the non banking finance company it is lending money.

Deutsche Bank India report compiled by Regtechtimes emphasize the need for knowing the customer’s customers. It’s not only the legal compliance issue. It helps properly manage your institutions risk, to protect against infiltration by illicit funds. These reports could be the essential part of the widespread compliance function of the bank.