DFS Findings: 2013-2018 Monitoring Gaps

DEUTSCHE BANK REGULATORY SETTLEMENT NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES CONSENT ORDER REGARDING JEFFREY EPSTEIN BANKING FAILURES 2020 In July 2020, Deutsche Bank AG agreed to pay one hundred fifty million dollars to the New York State Department of Financial Services (NYDFS) to settle regulatory charges arising from the bank's relationship with Jeffrey Edward Epstein. The consent order represented a significant enforcement action addressing failures in Deutsche Bank's anti-money laundering compliance and due diligence procedures related to the Epstein account. REGULATORY FINDINGS: The NYDFS consent order detailed significant compliance failures by Deutsche Bank in its handling of the Epstein relationship. Deutsche Bank onboarded Jeffrey Epstein as a client in 2013, after JPMorgan Chase had terminated its banking relationship with Epstein. At the time of onboarding, Epstein had already pleaded guilty in 2008 to state prostitution charges in Palm Beach County, Florida, was a registered sex offender, and was the subject of extensive public reporting regarding allegations of sexual abuse of underage girls. Despite this widely known background, Deutsche Bank's compliance and due diligence processes failed to adequately assess the risks associated with the Epstein relationship. The NYDFS found that Deutsche Bank processed hundreds of transactions totaling millions of dollars through Epstein's accounts that should have prompted the filing of Suspicious Activity Reports. These transactions included payments to individuals who had been publicly identified as Epstein co-conspirators, regular cash withdrawals in amounts and patterns consistent with structuring, and payments to Russian models and Eastern European women. SPECIFIC COMPLIANCE FAILURES: The consent order identified multiple breakdowns in Deutsche Bank's compliance framework. The bank's Know Your Customer (KYC) procedures failed to flag the Epstein account for enhanced due diligence despite the client's criminal history and high-risk profile. Internal warnings raised by compliance officers were not adequately escalated or addressed. Transaction monitoring systems failed to detect suspicious patterns, and when alerts were generated, they were not properly investigated or resolved. The NYDFS found that Deutsche Bank processed approximately one hundred fifty suspicious transactions through the Epstein accounts between 2013 and 2018, including wire transfers to entities and individuals linked to Epstein's alleged sex trafficking activities. The bank maintained the Epstein relationship for approximately five years before closing his accounts in 2018, following the publication of the Miami Herald's investigative series titled Perversion of Justice. SETTLEMENT TERMS: The one hundred fifty million dollar penalty was the largest NYDFS enforcement action related to an individual client relationship at the time. The consent order required Deutsche Bank to engage an independent monitor to review and improve its Bank Secrecy Act and anti-money laundering compliance programs. The bank was also required to remediate the deficiencies identified in the consent order and to submit periodic reports to NYDFS demonstrating compliance improvements. Source: NYDFS Consent Order, Deutsche Bank AG New York State Department of Financial Services, July 2020