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Deutsche Bank consents to pay $26.3 million to resolve a class action involving Jeffrey Epstein

In order to resolve a class action lawsuit brought by a number of Deutsche Bank investors regarding the bank's shortcomings in anti-money laundering (AML) compliance with respect to a number of clients, including Jeffrey Epstein and Danske Bank's Estonia branch, Deutsche Bank agreed to pay $26.25 million.

The proposed settlement, which was submitted on Friday in the Southern District of New York's federal court, pertains to the months of March 2017 and September 2020. The settlement still needs to be approved by U.S. District Judge Jed Rakoff, who gave the class action permission to proceed in June.

Deutsche Bank failed to respond when reached through a representative. When consenting to a settlement, the bank denied any wrongdoing.

Lead plaintiff Yun Wang and named plaintiff Ali Karimi made claims in a lawsuit filed in July 2020 that Deutsche Bank had failed to disclose that it had not "remediate[d] deficiencies related to AML, its disclosure controls and procedures and internal control over financial reporting, and its U.S. operations’ troubled condition," and that it had also failed to "properly monitor customers that the bank itself deemed to be high risk." Two correspondent banks, Danske Estonia and the Federal Bank of the Middle East (FBME Bank), "which were both the subjects of prior scandals involving financial misconduct," as well as convicted sexual offender Epstein were among those clients.

The bank's public claims detailing alleged enhancements to its AML program were "materially false and misleading at relevant times," according to the lawsuit, and such statements were expected to have a materially detrimental impact on the bank's financial results and reputation.

In the complaint, defendants included current CEO of Deutsche Bank Christian Sewing, CFO James von Moltke, and previous CEO John Cryan.

The lawsuit highlighted that identical accusations had already been made by other regulators. According to media sources at the time, the Federal Reserve severely chastised Deutsche Firm's U.S. operations in May 2020 after an audit found the bank had not addressed "multiple concerns identified years earlier" about the bank's AML and other control systems.

For "significant compliance failures in connection with the bank’s relationship with Jeffrey Epstein and correspondent banking relationships with Danske Bank Estonia and FBME Bank," the New York State Department of Financial Services (NYDFS) fined Deutsche Bank $150 million in July 2020. A week later, the plaintiffs filed their lawsuit, raising many of the same issues that the NYDFS had with the bank.

Poor internal AML procedures were a contributing factor in the problems at FBME Bank and Danske Bank as well.

An estimated 200 billion euros (U.S. $192 million) in illegal cash from nations including Azerbaijan, Moldova, and Russia were being laundered via Danske Bank's Estonia office over a nine-year period from February 2007 to the end of January 2016.

After determining that the bank had enabled "money laundering, terrorist financing, transnational organized crime, fraud, sanctions evasion, and other illicit activity internationally and through the U.S. financial system," the Financial Crimes Enforcement Network of the U.S. Treasury cut off FBME Bank's access to the American financial system in 2015.



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