Deutsche Bank’s Answers on Scandal Leave European Lawmakers Frustrated
(Bloomberg) -- Deutsche Bank AG defended its role in one of Europe’s biggest money-laundering scandals in a rare hearing before European lawmakers that highlighted increasing frustration with the lender and its German supervisor.
Called before the European Parliament after Deutsche Bank was once again tied to a number scandals late last year, Stephan Wilken, head of its anti-financial crime unit, on Monday night insisted the firm was serious about cleaning up its act. He reiterated that as a correspondent bank for Danske Bank A/S, the lender at the center of the money laundering case, Deutsche Bank had no role in vetting clients.
Handling funds of another bank’s clients is “a core tool to allow international trade,” Wilken told lawmakers in Brussels. “As of today, there are no safe and credible alternatives to correspondent banking.”
A special committee set up to look into financial crimes had taken the unusual step of devoting a full hearing to a single bank’s legal troubles, after Deutsche Bank late last year was implicated in the Danske scandal, raided in connection with the Panama Papers, and tied to a widening tax scandal in Germany. Lawmakers sought answers as to why the firm was involved in so many cases, and what lessons it had learned.
In particular, they wanted to know why the bank ended its relationship with Danske relatively late and hear details about its business with U.S. President Donald Trump and Russian state-owned lender VTB. The business relationship between Germany’s largest lender and the U.S. president has come under heightened scrutiny since Democrats took control of the House of Representatives.
Wilken often evaded their questions, while Jens Fuerhoff, a representative of German regulator BaFin, said he couldn’t talk about the company specifically.
Deutsche Bank “refused more persistently than any other bank in the European Parliament to make concrete statements on individual cases of money laundering,” said Sven Giegold, a member of the assembly.
While defending Deutsche Bank’s correspondent banking business, Wilken said the lender had slashed its relationships of this type by 40 percent over the last two years, in line with a “general industry trend” to reduce risks. BaFin has said that it’s giving more scrutiny to correspondent banking to examine whether safety measures are respected.
Danske used correspondent banks such as Deutsche Bank to move money abroad and has said that much of about $230 billion that flowed through a tiny Estonian outpost may have been dirty. Deutsche Bank has said it’s started an internal probe into the case even though it’s not aware of any wrongdoing.
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