Deutsche Bank is expected to pay $150 million for failure to provide proper oversight in the case of Jeffrey Epstein’s account, as well as two others. According to a press release by the Department of Financial Services in the state of New York, the settlement “marks the first enforcement action by a regulator against a financial institution for dealings with Jeffrey Epstein.”
Deutsche’s Superintendent of Financial Services Linda A. Lacewell said banks should tailor the monitoring of their customers’ activity according to any risk associated with the customer.
“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,” she said. “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.”
Deutsche Bank responded to the news by expressing “deep regret” for its lack of action on behalf of Epstein until after he was arrested
“We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes. We have learnt from our mistakes and deeply regret our association with Epstein,” read one tweet.
“Immediately following Epstein’s arrest, we contacted law enforcement and offered our full assistance with their investigation,” another tweet added.
We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes. We have learnt from our mistakes and deeply regret our association with Epstein.
— Deutsche Bank (@DeutscheBank) July 7, 2020
According to the DFS press release, the bank made “a series of procedural failures, mistakes, and sloppiness” when it refused to acknowledge actions that “should have prompted additional scrutiny in light of Mr. Epstein’s history.”
Some of these actions include allowing Epstein to make millions of dollar payments in settlement and legal fees, payments to models in Russia, periodic withdrawals of hundreds of thousands of dollars in cash, and payments to co-conspirators in his sexual abuse case.
According to the New York Times, regulators say that Epstein “sent $2.65 million in 120 wire transfers through accounts established in the name of an entity called the Butterfly Trust” to three co-conspirators attached to Epstein’s prostitution charges in 2008.
Southern Trust Company and its subsidiary, Southern Financial, were both used by Epstein to open accounts at Deutsche Bank and potentially sham the US Virgin Islands to “receive a lucrative tax break.”
Despite persistent questioning by executives and employees at Deutsche, Epstein’s financial activity remained unchecked. Even when the bank eventually attempted to implement new monitoring of Epstein’s accounts, there was reported confusion and the policies were not enforced.
The bank ended its relationship with Epstein in 2018 after details of Epstein’s non-prosecution agreement with federal prosecutors re-surfaced. Recommendations were still made, however, by a Deutsche Bank employee for Epstein’s transfer to other banks.
According to the New York Times, “the bank said it has invested nearly $1 billion in training and oversight, and had beefed up its anti-financial crime division.” It has also ended relationships with other “high-risk” clients.
“It is our duty and our social responsibility to ensure that our banking services are used only for legitimate purposes,” said Christian Sewing, the bank’s chief executive. “That’s exactly why we should always examine things critically, ask questions and speak up.”
Ghislane Maxwell, Epstein’s business associate and close friend, was indicted last week by a grand jury “on charges of conspiring to entice minors to engage in illegal sex acts, conspiracy to transport minors for illegal sex acts, transportation of a minor to engage in illegal sex acts, and perjury, 24 years after allegations had been made of similar crimes.”