Business Essentials for Professionals


Deutsche Bank German HQ Raided In Connection To Money Laundering Case

Deutsche Bank German HQ Raided In Connection To Money Laundering Case
In what is another blow to the image and reputation of the German lender Deutsche Bank, following a string of scandals and fines that already had waned its image among investors, the lender’s headquarters in Frankfurt was raided by the German police as a part of the investigations into the alleged role of the bank in aiding criminals in money laundering via a host of offshore tax havens.
The raid was conducted by a huge contingent of German authorities include about 170 prosecutors, federal agents, police officers and tax authorities who conducted a thorough search of the premises along with five other sites in the vicinity said German prosecutors in Frankfurt. The allegations involved laundering amounting to hundreds of millions of euros and the raid resulted in seizure of paper documents and electronic records which could still be found at the office.
According to the prosecutors, the basis of the investigations was the information published through the leak of the so called Panama Papers and Offshore Leaks which is comprised of a large number of confidential documents. This expose revealed the manner in which global money laundering and tax evasion takes place. It has been alleged that the authorities have been able to identify a number of Deutsche Bank employees who reportedly advised and guided customers to launder money through setting up of offshore companies in tax havens and then showed them how to illegally transfer money to such accounts to evade taxes as well as ill earned money. All of these were done through the use of Deutsche Bank accounts according to the prosecutors. One of the subsidiaries of the British Virgin Islands has also been at the centre of an intense scrutiny.
In a statement, Deutsche Bank said that it was “cooperating fully” with investigators said they were surprised by the raids. “We have already provided the authorities with all the relevant information regarding Panama Papers,” Jörg Eigendorf, a Deutsche Bank spokesman, said on Twitter.
Analysts noted that the efforts by the German lender to reshape the corporate culture at the bank and enhance compliance, which have been ongoing for years, have not yielded results and that is reflected in the size of the raid and sums of money involved. The bank had faced a number of allegations and scandals throughout last decade and ended up paying billions of euros in fines over charges of financial and ethical misconduct which included cheating buyers of mortgage-backed securities, illegally and unethically working with other banks to manipulate the benchmark interest rates and the foreign exchange trading which resulted in losses to customers.
“This says they are not genuine and sincere about changing this culture of noncompliance and changing this culture of impunity,” said Jimmy Gurulé, a former United States assistant attorney general and a professor of criminal law at Notre Dame Law School.
The bank’s profits have been hit because of the regulatory and enforcement actions together with the mistakes made by the management. In the third quarter, the lender generated net earnings of 750 million euros on revenues of €19.7 billion. That earning is considered to be a bare minimum considering the size of the bank and is less than 50 per cent of the earnings that it had made in the same period a year ago.
Deutsche would scale back its investment banking unit which has been the source of most of the trouble, said Christian Sewing in April, after being appointed as the third chief executive in as many years. That strategic decision has virtually put the lender out of the race ot complete with the likes of Goldman Sachs and JPMorgan Chase.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc