Deutsche Bank reaches $150m settlement linked to Jeffrey Epstein

Deutsche Bank (DBK.DE) has agreed to pay $150m (£119m) to settle investigations into compliance failings in part linked to dealings with Jeffrey Epstein.

New York’s Department of Financial Services said in a statement on Tuesday it had imposed the penalty on Deutsche Bank’s New York branch for “significant compliance failures in connection with the Bank’s relationship with Jeffrey Epstein,” the accused child sex trafficker who died in police custody last year.

The penalty also covers anti-money laundering failings linked to Danske Bank Estonia and Cyprus-based bank FBME.

The settlement brings to an end three investigations by the regulator into compliance failings at the German banking giant.

It also marks the first enforcement action by a financial regulator linked to the Epstein case.

Epstein, who is believed to have been a billionaire, became a client of Deutsche Bank’s in 2013, five years after he pleaded guilty to procuring for prostitution a girl below the age of 18 in Florida.

Despite coverage of the settlement and subsequent allegations against Epstein, investigators found Deutsche Bank failed to properly monitor his account. “Hundreds of transactions totalling millions of dollars” that raised red flags were missed, the New York Department of Financial Services said.

These included payments to Epstein’s alleged co-conspirators, settlement payments with victims totalling $7m, payments to Russian models, payments for women’s school tuition and expenses, and payments to “numerous women with Eastern European surnames” that were “consistent with public allegations of prior wrongdoing.”

Repeated “suspicious” cash withdrawals by Epstein — totally over $800,000 over four years — also failed to raise concerns.

“Despite knowing Mr. Epstein’s terrible criminal history, the Bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions,” New York’s Superintendent of Financial Services Linda A. Lacewell said in a statement.

A spokesperson for Deutsche Bank said the bank “deeply” regretted its association with Epstein and said over $1bn has been invested in “training, controls and operational processes”.

In a memo sent to staff on Tuesday and shared with journalists, Deutsche Bank chief executive Christian Sewing said working with Epstein was “a critical mistake and should never have happened.”

“We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes, and have learnt from our mistakes and shortcomings,” the spokesperson for Deutsche Bank said.

“Immediately following Epstein’s arrest, we contacted law enforcement and offered our full assistance with their investigation. We have been fully transparent and have addressed these matters with our regulator, adjusted our risk tolerance and systematically tackled the issues.”

The $150m penalty also covers two separate investigations into Deutsche Bank’s relationship with Danske Bank Estonia and FBME Bank.

Danske Bank’s Estonia branch was found in 2017 to be at the heart of possibly the biggest money laundering scandal in history. An estimated €200bn of suspicious transactions were discovered moving money out of Russia and former Soviet states.