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Deutsche Bank U.S. Unit Faces Renewed Criticism Over Compliance

May 14, 2020, 8:15 AM

Deutsche Bank AG is facing renewed criticism from U.S. watchdogs over compliance in a blow to Chief Executive Officer Christian Sewing’s efforts to make regulation a top priority of his tenure.

The New York Federal Reserve in late March sent an audit report to Sewing and other top executives expressing continued dissatisfaction with anti-money laundering controls and liquidity management at its U.S. unit, according to a person familiar with the matter. The report is based on investigations in late 2019 and early 2020 and gave the unit’s organization the second-worst grade, according to the newspaper Sueddeutsche Zeitung, which first reported the news.

Deutsche Bank’s deficient controls and liquidity management have been the source of tensions with regulators around the world for years. Sewing has made righting the bank’s issues a top priority since taking over two years ago. That included naming Christiana Riley to take over the U.S. operations and tasking her with improving relations with regulators there.

A spokesman for Deutsche Bank declined to comment.

READ MORE: A Decade of Deutsche Bank Investigations: $18 Billion Legal Tab

Deutsche Bank’s potential role in several money laundering scandals is the subject of a number of regulatory probes. It is still seeking to settle a probe by the U.S. Department of Justice whether it helped Russian clients move money illicitly out of the country and the Fed continues to investigate its role as correspondent bank for Danske Bank’s Estonia unit, which has been at the center of a far-ranging scandal, Bloomberg has reported.

The lender’s U.S. business was added to a group of troubled lenders monitored by the deposit insurance regulator in May 2018, months after the Federal Reserve placed the lender on its own list of problem banks, a person familiar with the matter said at the time.

The lender has “continued to improve our internal controls and processes,” Sewing said this week in remarks prepared for the annual general meeting next week. “But are we there yet regarding our controls? The answer is no. We must continue to improve here and to invest in our processes – in close contact with our regulators.”

To contact the reporter on this story:
Steven Arons in Frankfurt at

To contact the editor responsible for this story:
Dale Crofts at

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