Deutsche Bank AG hit with $258 million in penalties
The Federal Reserve Board has announced a $58 million penalty and consent cease and desist order against Deutsche Bank AG, based in Frankfurt, Germany, related to violations of U.S. sanctions. The order requires Deutsche Bank to implement an enhanced program to ensure global compliance with U.S. sanctions administered by the U.S. Department of Treasury's Office of Foreign Assets Control. The Board acted based on unsafe and unsound practices at the bank, which the Board found failed to have sufficient policies and procedures to ensure that activities conducted at its offices outside of the United States complied with U.S. sanctions laws and were reported in a timely manner in response to inquiries by the Federal Reserve Bank of New York. The Board's order also prohibits the bank from re-employing individuals involved in past actions or retaining them as consultants or contractors.
The New York State Department of Financial Services (DFS) announced it has issued an order that the bank pay a $200 million penalty in conjunction with the Board's action for violation of state laws. The DFS press release described several active strategies used by the bank to "sanitize" wire transfer instructions to remove any reference to sanctioned persons or countries and to rely instead on special "code words" or notes that would trigger special message handling by the bank before payments were sent to the U.S. Over at least seven years through 2006, Deutsche Bank used its "OFAC-safe," non-transparent transaction methods to conduct over 27,200 U.S, dollar clearing transactions totaling over $10.8 billion on behalf of Iranian, Libyan, Syrian, Burmese, and Sudanese financial institutions and other entities subject to U.S. economic sanctions, including entities on OFAC's SDN List.