New York’s Department of Financial Services provided fresh details Tuesday of Epstein’s money movements in the years before his death. It laid out how Deutsche Bank sought him out as a customer after his conviction for soliciting underage girls in Florida -- and then helped him pay out millions of dollars in legal settlements, send money to women in eastern Europe and withdraw some $800,000 in cash for “travel, tipping and expenses,” according to the regulator.
Epstein’s victims may be emboldened by the action in their efforts to seek accountability and compensation from Epstein’s estate. They also could be looking for new information to arise from the arrest last week of
In its consent order, the regulator also chastised the bank for weak oversight of its correspondent banking relationships with
“Deutsche Bank failed to adequately monitor the activity of customers that the bank itself deemed to be high risk,” DFS Superintendent
Deutsche Bank, which cooperated with New York investigators, agreed to the information set out in the consent order.
“We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes, and have learnt from our mistakes and shortcomings,” said Daniel Hunter, a spokesman for the bank. The bank had spent almost $1 billion to improve its anti-money-laundering controls, he said.
According to the consent order, after Epstein’s relationship manager at one major bank moved to Deutsche Bank in late 2012, the manager encouraged top executives at Deutsche Bank’s wealth management Americas unit to recruit Epstein as a client. The relationship manager promised that Epstein could generate as much as $100 million to $300 million in flow, as well as $2 million to $4 million in annual revenue over time.
The regulator didn’t identify Epstein’s previous bank. He was a longtime client of JPMorgan Chase & Co.’s private bank, which severed the relationship around that time, after Epstein’s Florida conviction.
Despite the reputational risk that Epstein already represented, Deutsche Bank’s wealth management’s leadership approved him as a client. They allowed him to shield his identity by keeping his funds in a variety of entities that didn’t bear his name.
Soon after moving his funds to Deutsche Bank, Epstein began sending out payments of more than $10,000 to individuals who had been identified in news accounts as his co-conspirators. Many of the payments came out of an entity created by Epstein, referred to as the “Butterfly Trust.”
The Epstein associates aren’t identified in the New York filing. Maxwell is alleged in numerous media accounts to have been Epstein’s primary facilitator.
Over time, according to the New York regulator, Epstein paid out $2.65 million to his co-conspirators as well as various “women with Eastern European surnames,” ostensibly for hotel expenses, tuition and rent. Epstein characterized the women to the bank as employees or friends, according to DFS.
Epstein also paid out $7 million in apparent legal settlements and another $6 million to pay his own legal expenses and those of his co-conspirators, the regulator said.
The consent order also describes a series of withdrawals by Epstein’s personal lawyer totaling some $800,000 over a four-year period. The lawyer, who isn’t identified, asked the bank how much he could withdraw without setting off compliance alarms, according to DFS. The lawyer then spread out nearly 100 withdrawals, of $7,500 apiece, to keep them from going over the suggested limits, telling the bank the funds would be used by his client for “travel, tipping and expenses.”
The DFS also criticized Deutsche Bank’s lax approach to its correspondent banking relationships with FBME and Danske Bank, both eventually hobbled by money laundering scandals.
Although Cyprus-based FBME raised red flags on Deutsche’s risk-rating metric, the bank processed 478,379 dollar-denominated transactions over the course of its relationship, amounting to $618 billion. Deutsche Bank terminated the relationship in 2014, when the U.S. Treasury’s Financial Crimes Enforcement Network labeled FBME a “primary money laundering concern.”
As for Danske Bank, Deutsche Bank entered into a correspondent relationship with the Danish lender’s Estonia office in 2007. Over the next eight years, the risk rating of the Estonia branch went from bad to worse.
Although Deutsche Bank compliance managers continued to warn Danske of its growing problems, the Frankfurt lender didn’t cut ties to Danske until 2015. Danske Bank later admitted that roughly $230 billion that passed through its Estonian unit between 2007 and 2015 was suspicious; much of that moved through Deutsche Bank.
“The DFS’s factual findings on Danske Estonia and FBME, like our own internal investigation, identified various deficiencies in our oversight and monitoring of the banks that used our clearing services,” Hunter, the Deutsche Bank spokesman, said. “There was no intentional effort by anyone within the bank to facilitate unlawful activity.”
(Updates with Deutsche Bank spokesman)
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