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MoreISO/iStockBy CATHERINE THORBECKE and AARON KATERSKY, ABC News
(NEW YORK) — Deutsche Bank has agreed to pay $150 million in penalties over its relationship with Jeffrey Epstein as part of a consent order with regulators in New York, the state’s Department of Financial Services said Tuesday.
The multinational investment bank headquartered in Frankfurt, Germany, “failed to properly monitor account activity conducted on behalf of the registered sex offender despite ample information that was publicly available concerning the circumstances surrounding Mr. Epstein’s earlier criminal misconduct,” the New York State Department of Financial Services said.
The news marks the first enforcement action against a financial institution by a regulator for dealings with Epstein, according to the department.
Deutsche Bank responded to the news, saying the settlement reflects its “unreserved and transparent cooperation with our regulator.”
“It also shows how important it is for us to continue enhancing our anti-financial crime capabilities,” the bank said in a statement posted to its Twitter. “We have invested almost $1bn in improving our training, controls and operational processes, and have increased our AFC team to more than 1,500 people. Our transformation continues.”
A Deutsche Bank spokesperson told ABC News they “acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes, and have learnt from our mistakes and shortcomings.”
“Immediately following Epstein’s arrest, we contacted law enforcement and offered our full assistance with their investigation,” the spokesperson said. “We have been fully transparent and have addressed these matters with our regulator, adjusted our risk tolerance and systematically tackled the issues.”
“Our reputation is our most valuable asset and we deeply regret our association with Epstein,” the spokesperson added.
Deutsche Bank reportedly processed millions of dollars worth of transactions that should have prompted additional scrutiny in light of Epstein’s history, regulators allege.
Some red flags that should have been looked into include payments to individuals who were publicly alleged to have been conspirators in Epstein’s alleged abuse of young women, settlement payments totalling over $7 million, and payments to law firms in excess of $6 million for what appears to be legal expenses, the agency claimed. Moreover, his account reportedly included suspicious cash withdrawals totaling more than $800,000 over approximately four years.
The department alleges the “substantive failure” was compounded by a series of “procedural failures, mistakes, and sloppiness” in how the bank oversaw and managed Epstein’s accounts.
“Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system, and it is fundamental that banks tailor the monitoring of their customers’ activity based upon the types of risk that are posed by a particular customer,” Superintendent Linda Lacewell said in a statement.
“In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the Bank itself deemed to be high risk,” Lacewell added. “In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein’s terrible criminal history, the Bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions.”
New York Gov. Andrew Cuomo said in a separate statement, “No matter how rich, how big or how powerful an institution you are, predatory behavior of any type will not be tolerated in New York.”
“For years, Mr. Epstein’s criminal, abusive behavior was widely known, yet big institutions continued to excuse that history and lend their credibility or services for financial gain,” Cuomo said. He pledged that New York will “continue to take its role as a strong regulator seriously and will use every possible tool to protect New Yorkers from predatory behavior in all its forms.”
Deutsche Bank included Epstein as an honorary “politically exposed person” or PEP. This classification resulted in enhanced transaction monitoring of Epstein’s accounts, yet the New York State Department of Financial Services claims this scrutiny “was not tailored to the specific risks that he posed.”
While Epstein held accounts at Deutsche Bank, he reportedly sent more than 120 wires totaling $2.65 million. Some of it went to alleged co-conspirators or “women with Eastern European surnames for the stated purpose of covering hotel expenses, tuition and rent,” according to the consent order.
Deutsche Bank at one point was apparently so concerned about its relationship with Epstein that an unnamed executive from the branch met with him at his Manhattan home. Yet the bank continued business as usual with Epstein, according to the consent order.
The move from New York financial regulators comes less than a week after Ghislaine Maxwell, the former companion of Jeffrey Epstein, was arrested by the FBI in New Hampshire.
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