Thread by @karolcummins

Deutsche Bank's U.S. Unit Kept Danske's Shady Billions Flowing

Ex-workers say scrutiny of individual clients was discouraged

German lender’s U.S. subsidiary draws focus of Fed regulators

H/T ⁦@ThomasS4217⁩ bloomberg.com/news/articles/…

📌Years before regulators learned about what may be one of the biggest money-laundering pipelines in history, low-level bank employees in Jacksonville, Florida, sounded repeated alarms.
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📌Compliance workers for Deutsche Bank AG flagged some of at least $150 billion in transactions that the bank’s U.S. subsidiary handled for a tiny Estonian unit of Danske Bank A/S, according to a former compliance officer.
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📌When workers sought broader scrutiny of certain clients, they got a familiar response from some higher-ups, the officer said: Shut up, focus on the transaction in front of you, file your paperwork and move on.😱
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📌Internal documents, court records and interviews with dozens of people -- including more than 20 current and former employees of the troubled German lender -- show that its U.S. unit largely resisted strict money-laundering compliance for years.
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📌The insider accounts help explain why Deutsche’s U.S. subsidiary kept handling Danske’s business after competitors quit.

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📌Although U.S. executives routinely promised regulators they’d get tough, former staffers say such efforts were often disregarded in favor of cozy relationships with overseas customers.
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📌The suspicious billions kept flowing -- not just from Danske’s Estonian branch, but from various clients that would eventually be snared in other global money-laundering scandals.
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📌In the Danske case, bank executives have said they’re cooperating with investigators in multiple jurisdictions and that they met their legal obligations as they dealt with the Danish lender from 2007 to 2015.🙄
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📌Their defense would have more appeal if Deutsche Bank didn’t have such a poor track record,” said Jimmy Gurulé, a former undersecretary for enforcement in the U.S. Treasury Department.

📌📌“There’s been one problem after another.”
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📌A Decade of Deutsche Bank Investigations: $18 Billion Legal Tab

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📌📌Deutsche’s U.S. trust company, which houses a global transaction bank, a private wealth unit and a lender, has attracted attention for the hundreds of millions of dollars in loans it extended to Trump’s real estate business.
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❓❓❓Fraud❓❓❓

👉🏼Deutsche Bank & Trump

https://twitter.com/karolcummins/status/1112844056546041857?s=21

Deutsche Bank ♥️ Trump

https://twitter.com/karolcummins/status/1108143652725907456?s=21

💣Buried Lede💣

📌The Investigation into Trump & Deutsche Bank is now the focus of a Federal Reserve probe into the Danske affair, according to a person briefed on the situation who asked not to be named because the regulator’s work isn’t yet public
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📌📌It’s hardly the first time for such scrutiny. Over the trust bank’s 20-year history, government authorities have concluded at least five times that it either failed to police the money flows it handled or enabled efforts to evade U.S. law.
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‼️Tumultuous History‼️

📌Deutsche Bank Trust Co. Americas -- which is separate from Deutsche Bank Securities Inc., the better-known trading division -- rose from the ashes of another scandal-plagued bank.
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The century-old Bankers Trust was largely uncontroversial until the 1990s, when it began innovating in financial derivatives. Customers lost money & sued, & the litigation unearthed taped conversations among traders who called their deals “gravy trains.”
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In transcripts, an employee discussed a client’s loss on a trade, saying, “Pad the number a little bit.” Another worker told a colleague, “Funny business, you know? Lure people into that calm and then just totally f--- ’em.”
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📌By 1999, Bankers Trust was ripe for rescue by a German buyer with about $9 billion to spend.
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📌📌Soon the new institution had its own tumultuous history. From 1999 through 2006, it handled almost $11 billion in U.S. dollar transactions for customers in nations under sanctions: Iran, Syria, Libya, Burma and Sudan.
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📌📌Later, it helped rich Russians move $10 billion from their country using “mirror trades” -- simultaneous stock trades in separate jurisdictions that bypassed customary hoops for transferring money.
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📌In Danske’s case, Danish regulators say Estonian EEs covered up money-laundering violations for years.

📌The bank has admitted that roughly $230B that passed through that unit between 2007 & 2015 -- much of it from Russian clients -- was suspicious.
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📌A person familiar with the matter confirmed that at least $150 billion flowed through Deutsche Bank, and one report put the figure at about $185 billion.

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📌When that money flow began, the chief of the German lender’s U.S. business was Seth Waugh, a perpetually tanned executive who wore his graying hair a bit long by bankers’ standards.
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📌Waugh pledged to regulators in 2005 that he’d overhaul the bank’s money-laundering protections.

📌But in a 2013 letter that served as a scathing review of his tenure, the FRB of NY concluded that “no progress was made” on concerns first raised in 2002.
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📌📌Throughout Deutsche Bank, compliance staff members were considered to be “one step above the janitors,” an unnamed former executive told lawyers who filed a 2016 lawsuit against the bank. Yikes!
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📌📌Banks’ efforts to prevent money laundering revolve around three words: “Know your customer.”

📌📌U.S. rules under the Bank Secrecy Act require bankers to keep tabs on who they’re doing business with.
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‼️The goal is to keep criminals and terrorists from plowing illicit cash into legitimate investments.
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📌📌Files submitted to compliance workers from overseas often lacked detail about who was transmitting money, according to former workers and legal filings in the 2016 lawsuit.
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📌Specialists hired to advise the bank on gaps in its monitoring systems were instead assigned to review individual transactions that those systems had flagged.
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📌However, they were often rebuffed by New York executives or supervisors in New Jersey if they singled out particular customers for deeper scrutiny.

📌Trump perhaps?
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📌📌In such cases, staff members were directed to file routine “suspicious activity reports,” or SARs, a basic legal requirement in cases where bank employees consider a source of funds to be questionable.
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📌Such filings record potentially problematic activity but don’t trigger government reviews on their own.

📌Often, they simply languish at the Treasury Department.
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U.S. banking laws require correspondent banks to make sure their customers are policing their own clients -- especially on big transactions.
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📌Another bank clearly had qualms about Danske; JPMorgan Chase & Co. ended its correspondent relationship with Danske’s Estonian branch in 2013.
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📌Bank of America Corp. cut off its relationship with the unit in May 2015.

📌Deutsche Bank was the last to break with Danske later that year.
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📌Failure to fix its money-laundering protections quickly would mean its “financial condition and reputation could be materially and adversely affected,” the bank said.

📌Weber might have been just the person to help.

📌But he quit three months ago.
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#DeutscheBank
#DanskeBank
#Trump
#MoneyLaudering