Federal police, law enforcement agencies and the financial regulator BaFin raided Deutsche Bank’s Frankfurt headquarters on Friday, prosecutors said in a statement.
Prosecutors said the Frankfurt Regional Court had issued a search warrant based on suspicions that unnamed Deutsche Bank employees might have violated money laundering laws. They did not want to give any further details.
Deutsche Bank confirmed the raid and said it was linked to suspicious activity reports from the bank pointing to potential money laundering, adding that it was “fully cooperating with authorities”.
A person familiar with the police investigation told the Financial Times that the raid involved a payment from Rifaat al-Assad, an uncle of the Syrian President; he was sentenced to four years in prison in France last year for money laundering. Assad was not a customer of Deutsche Bank, but Deutsche Bank had processed at least one payment on behalf of a lender with which Assad had an account about five years ago.
Deutsche Bank commercial bank provides correspondent banking services to other lenders. In such transactions, it acts as an intermediary and handles cross-border money flows between banks.
The payment was discovered by Deutsche Bank when checking its records for Assad-related transactions following his conviction in France, and was subsequently reported to Germany’s anti-money laundering authorities. The Handelsblatt first reported on the Assad connection.
Other people told the FT that the raid involved potentially suspicious money released by Deutsche Bank as a correspondent bank, but did not confirm the identity of the person involved.
The raid was prompted by the late filing of the transaction, with prosecutors suspecting the lender may have breached its legal obligations by failing to report it sooner, the people said.
The raid comes as a blow to CEO Christian Sewing, who after his promotion to the top post four years ago vowed to put an end to Germany’s long history of legal and malpractice problems. “In recent years we have reduced our legal risks significantly,” he said in 2019, adding that the bank has spent “a lot” to strengthen its internal controls. “We are constantly improving and do not compromise.”
Deutsche Bank shares fell nearly 3 percent after the news but mostly recovered by early afternoon.
The raid was unrelated to a suspicious activity report Deutsche Bank filed in 2018 about a payment of over €160,000 from a customer to one of its most senior bankers, other people familiar with the matter told the FT. At that time, Asoka Woehrmann, then head of Deutsche Bank’s private customer business in Germany, received the money from Frankfurt entrepreneur Daniel Wruck, the Financial Times reported in January.
The men later explained that the payment was part of a failed attempt to buy a Porsche. Wöhrmann is now CEO of asset manager DWS and is being investigated by Deutsche Bank for this transaction and the alleged use of a private email address for business purposes.
In recent years, Deutsche Bank has come under fire from regulators for inadequate money laundering controls. A year ago, BaFin again asked Deutsche Bank to further improve its controls in this area. At the time, Germany’s financial regulator expanded and extended the mandate of consultancy KPMG, which it installed in September 2018 as a special representative to oversee the lender’s progress in tightening its internal controls.
BaFin also asked the country’s largest bank to take “further appropriate internal security measures” and “comply with due diligence obligations”. Without going into detail, BaFin said the lender had to address deficiencies “particularly in regular customer reviews” but also in its “correspondent.” [banking] Business Relationships and Transaction Monitoring”.
In November 2018, Deutsche Bank was raided by 170 police officers, prosecutors and tax inspectors on alleged money laundering charges in a raid that hit the bank’s stock.
Investigators then focused on suspicious transactions in the bank’s asset management between 2013 and 2018. Criminal investigations into the case were later dropped, but Deutsche Bank paid 15 million euros over deficiencies in money laundering controls.
In October 2020, Frankfurt prosecutors fined the bank €13.5 million for late reporting of suspicious transactions it had processed for Danske Bank’s Estonian branch.
The lender then announced an organizational reorganization of its financial crime unit, giving responsibility to its head of administration, Stefan Simon. In an interview with the FT last year, Simon acknowledged that competitors had started strengthening their controls to fight financial crime earlier than Deutsche.
“We were lagging behind and we’ve been catching up for a while,” he told the FT. He initiated a major overhaul of the bank’s compliance, centralizing the department at the lender’s Frankfurt headquarters and replacing nearly half the senior staff of the control functions, including the group money laundering officer. Deutsche also provided an additional but undisclosed sum for the compliance overhaul.