Deutsche Bank confirms police investigation stemming from Panama Papers

Muriel Colon
November 30, 2018

A number of banks including Swedish lenders Nordea and Handelsbanken have already been fined by financial regulators for violating money laundering rules as a result of the papers.

There was no indication that Thursday's raid was linked to that scandal, though Deutsche Bank says that it has since stopped providing dollar transactions in some countries, including Latvia.

In 2016 alone, over 900 customers were served by a Deutsche Bank subsidiary registered on the British Virgin Islands, generating a volume of 311 million euros. The bank confirmed that police had raided several locations in Germany and that it was co-operating fully with the probe.

A total of six properties were searched in Frankfurt, Eschborn and Gross-Umstadt, the public prosecutor said. German prosecutors raided several Deutsche Bank offices in the Frankfurt area over suspicions of money laundering based on revelations from the 2016 "Panama Papers" data leak.

Deutsche Bank shares slid sharply after the news broke, and were down 3.75 percent in midday trading in Frankfurt.

The investigation was triggered after investigators reviewed so-called "Offshore-Leaks" and "Panama Papers", the prosecutor said.

It's been a tough few weeks for Deutsche after reports that its head of the Americas, Tom Patrick, would leave the bank by year-end alongside a raft of other senior management changes.

Citing people familiar with the matter, Bloomberg News had reported that Deutsche was the unnamed bank a Danske whistleblower said had handled nearly $150 billion of suspect transactions originating in the Danish firm's Estonian branch.

In September, Germany's financial watchdog - BaFin - ordered Deutsche Bank to do more to prevent money laundering and 'terrorist financing, ' and appointed KPMG as third party to assess progress.

It is separate from another money laundering scandal surrounding Danske Bank, where Deutsche Bank is involved.

The bank said at the end of October that it expected to report a net profit for the first time since 2014, not least because no legal settlements in the hundreds of millions or even billions were on the horizon as in previous years.

The bank has publicly said that it agreed it needed to improve its processes to properly identify clients.

Denmark's state prosecutor on November 28 filed preliminary charges against Danske for alleged violations of the country's anti-money laundering act in relation to its Estonian branch.

Deutsche Bank employees had devised strategies to get around the sanctions and carry out transactions worth roughly $10.9 billion.

The bank has already recorded annual loses after agreeing to pay a $7.2 billion settlement with U.S. authorities after it sold toxic mortgage agreements prior to the 2008 financial crash.

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