Deutsche Bank discovers serious failings in its AML and sanctions controls

These allowed cheques and high-value electronic payments to be processed without proper screening for years, internal auditors found. In 2018, fewer than 100 cheques were affected by the issue, but auditors admitted they could not be sure how many passed through before 2018, they said. Even if the use of cheques is in decline, Deutsche still processes about 50,000 a year through its UK and Ireland cash management unit.

Among “core deficiencies”, auditors found “filtering gap” that affects cheques written by corporate clients to foreign recipients. Deutsche’s compliance and audit teams classed the “critical and significant” issues F3 and F4 on German watchdog BaFin’s anti-money laundering deficiency scale, the two most severe categories that often lead to regulatory censure and fines.

An F3 finding indicates a “grave deficiency” with “significant consequences” for preventing money laundering. F4 is defined as an “extremely grave deficiency” that “significantly impairs or totally eliminates” the affected anti-money laundering prevention measure.

Nevertheless, the bank said it had spent EUR 9 mln improving its Swift IT system in the past two years and had solved eight of the 11 major faults identified so far, the online publication added. Moreover, it is introducing a “four-eyes” rule, where at least two people must check high-value payments.