In an interview with NPR's Fresh Air one year ago, Harding said,
"While money from Deutsche Bank New York is going into the Trump Organization, Deutsche Bank in Moscow is at the center of a massive Russian money laundering operation involving about $10 billion"
that allowed Russia's elites to take rubles out of Russia and convert them into dollars in the U.S.
Authorities in both the U.S. and U.K. have imposed heavy fines on Deutsche Bank for its practices involving Russian accounts, Harding said.
Police vehicles are parked in front of Deutsche Bank headquarters as roughly 170 officers, prosecutors and tax inspectors searched the bank's offices in and around Frankfurt, Germany, on Thursday. Kai Pfaffenbach/Reuters hide caption
Police vehicles are parked in front of Deutsche Bank headquarters as roughly 170 officers, prosecutors and tax inspectors searched the bank's offices in and around Frankfurt, Germany, on Thursday.
Kai Pfaffenbach/Reuters
German police raided Deutsche Bank offices on Thursday, seeking evidence in a money laundering investigation into the practice of hiding money offshore to elude tax collectors and government regulators.
"Police officers and tax inspectors entered Deutsche Bank's headquarters in Frankfurt early Thursday morning and seized documents," NPR's Esme Nicholson reports from Berlin. "Prosecutors are investigating two employees of the bank who allegedly assisted customers in setting up offshore firms to avoid anti-money laundering safeguards when transferring money to accounts at Deutsche Bank."
Nicholson adds, "According to investigators, in 2016 alone, more than 900 Deutsche Bank customers were served by a subsidiary registered in the British Virgin Islands."
Those 900 customers did business totaling 311 million euros (about $350 million), the Frankfurt prosecutor's office said.
The search involved some 170 officers from the prosecutor's office, the tax investigation department and the federal police, said senior public prosecutor Nadja Niesen, in an email to NPR. She added that the search resulted in the seizure of "numerous business documents" in either electronic or paper form. There have been no arrests, Niesen said.
Deutsche Bank has been fined and criticized for its poor record of preventing money laundering. As Deutsche Welle reports, "In August, it confirmed that even after it was fined for helping Russian clients wash some $10 billion, its mechanisms to stop such criminal activity were still inefficient.
In a brief statement, the bank confirmed the investigation taking place "at a number of our offices in Germany."
Without providing details about the inquiry, Deutsche Bank stated, "The investigation has to do with the Panama Papers case." It added, "We are cooperating fully with the authorities."
Later, the company said in an update, "As far as we are concerned, we have already provided the authorities with all the relevant information regarding Panama Papers."
Containing at least 2 terabytes of data, the Panama Papers — a trove of documents leaked from a Panamanian law firm — detailed how hundreds of people and businesses used offshore accounts to hide money, in a report that also named large banks such as HSBC and UBS in addition to Deutsche Bank.
In recent years, Deutsche Bank has been in the news not only for its prominence in the Panama Papers, but also for its ties to President Trump, in a tumultuous relationship that goes back some 20 years.
Trump and the bank once sued each other after he failed to repay a $300 million loan. And the author and reporter Luke Harding has described a "shuffle of money" between the bank's dealings with figures in Russia and its business with Trump.
In an interview with NPR's Fresh Air one year ago, Harding said, "While money from Deutsche Bank New York is going into the Trump Organization, Deutsche Bank in Moscow is at the center of a massive Russian money laundering operation involving about $10 billion" that allowed Russia's elites to take rubles out of Russia and convert them into dollars in the U.S.
Authorities in both the U.S. and U.K. have imposed heavy fines on Deutsche Bank for its practices involving Russian accounts, Harding said.
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Deutsche Bank Offices Are Raided In Money Laundering Probe
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Melissa Eddy reported from Berlin, and Amie Tsang from London.
The activities at Deutsche Bank AG that prompted a police raid on its headquarters took place as recently as this year, according to authorities.
While money-laundering suspicions stem from the 2016 disclosures known as the Panama Papers, the investigation covers the five-year period from 2013 to 2018, a spokeswoman for Frankfurt prosecutors said. The main suspects in the probe focused on a unit in the British Virgin Islands that processed 311 million euros ($354 million) in 2016 alone were two bank employees identified by their ages -- 50 and 46. One works in the anti-financial crime office.
Photographer: Andreas Arnold/Bloomberg
For the beleaguered German lender, the raid adds to a panoply of headaches -- commercial, regulatory and legal -- facing Chief Executive Office Christian Sewing, who took over in April, and Paul Achleitner, chairman since 2012. The stock has lost almost half its value this year, after sliding more than 3 percent on Thursday. The cost of insuring its junior debt against losses jumped 12 basis points to 384 basis points, the highest in two years, according to data compiled by CMA.
“This must be associated with criminal behavior and not just a trivial offense,” said Stefan Mueller chief executive officer of DGWA, an investment advisory boutique based in Frankfurt. He believes the bank will now be paralyzed for months until it becomes clear how it will be affected by new potential fines. “Maybe this time, Achleitner will fall. The bank needs fresh blood to make a radical cut at its management.”
Police at the Deutsche Bank headquarters on Nov. 29
Photographer: Andreas Arnold/Bloomberg
Panama Papers
The Panama Papers refer to a collection of documents leaked in 2016 from Mossack Fonseca, a Panama-based law firm that created shell companies to facilitate tax avoidance. At the time, Deutsche Bank severed ties with a Cypriot lender partly owned by VTB Group that was identified in the reporting.
Subsequent investigations exposed evidence Deutsche Bank helped clients set up off-shore accounts, prosecutors said. The officials said the Thursday raid wasn’t related to its role as a correspondent bank for money laundering at Denmark’s Danske Bank. Authorities seized documents and electronic files after more than six police vehicles, blue lights flashing, pulled up to Deutsche Bank’s main offices shortly before 9 a.m., in an operation involving about 170 officers. The home of one of the suspects was also searched.
The German lender may have helped clients in setting up offshore companies in tax havens. Money obtained illegally may have been transferred to accounts at Deutsche Bank, which failed to report the suspicions that the accounts may have been used to launder money, Frankfurt prosecutors said.
“As far as we are concerned, we had already provided the authorities with all the relevant information regarding the Panama Papers,” Deutsche Bank spokesman Joerg Eigendorf told reporters in Frankfurt.
The timing of the raid inflicts more pain on Deutsche Bank after a series of setbacks and repeated failures in keeping misconduct in check have pushed the shares to all-time lows. Investor worries have mounted over its role as a correspondent bank in the multi-billion-dollar money-laundering scandal at Danske, and Germany’s markets regulator has taken the unprecedented step of appointing a monitor to oversee the firm’s efforts to improve money-laundering and terrorism-financing controls.
Deutsche Bank has spent more than $18 billion paying fines and settling legal disputes since the start of 2008, according to company disclosures compiled by Bloomberg News. In Europe, Royal Bank of Scotland Group Plc is the only lender to have faced a bigger tab, at $18.1 billion, the Bloomberg calculations show.
"Just when you thought Deutsche Bank had left its legal troubles behind it, there’s more," said Markus Riesselmann, an analyst at Independent Research who recommends investors sell Deutsche Bank shares. "Investors really want to be able to focus on the bank’s operating business, so this noise around them is quite unhelpful for the mood.”
Photographer: Alex Kraus/Bloomberg
Sewing, who took the top job in April, is replacing key executives as part of a management shakeup as he struggles to get Germany’s biggest lender back on track. Sylvie Matherat, a management board member who serves as the bank’s chief regulatory officer, and Tom Patrick, who runs operations in the Americas, are among executives who might ultimately leave, people familiar with the matter said this week.
In a June 2017 interview, Matherat described the monumental task of modernizing the company’s compliance methods. After years of acquisitions and overseas expansion, the lender was left with a patchwork of computer programs to monitor transactions. The bank didn’t have a complete picture of the compliance controls in the organization’s businesses and regions, she said.
“I hate surprises, but you don’t know what you don’t know,” said Matherat, a lawyer and former deputy director general at the French central bank.
— With assistance by Martin Sobczyk, Edward Robinson, Katie Linsell, Tom Beardsworth, and Jan-Patrick Barnert
(Updates share, CDS prices.)
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Deutsche Bank Raided by Police in Money-Laundering Probe
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