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An investigation into possible money laundering involving a Syrian regime figure led to a raid on Deutsche Bank's Frankfurt headquarters on Friday morning.
The transaction took place five years ago and was discovered when a member of the Assad family was imprisoned in France for money laundering last year.
The investigation is thought to be looking into the timeliness with which Deutsche flagged the matter to officials when they did his KYC after it was reported that he was facing criminal charges in France.
The problem had been self-reported, and Deutsche Bank said it was "fully cooperating" with police and prosecutors who raided its offices at 10 a.m.
In a statement, the lender said, "This is an investigative measure by the Frankfurt public prosecutor's office in connection with suspicious activity reports [SARs] filed by the bank." "Deutsche Bank is fully cooperating with authorities," says the statement.
After obtaining a search warrant from the local court, the federal police office, criminal prosecutors, and the BaFin raided the offices – known locally as the "twin towers" – on Friday morning. The search warrant was issued by the district court in Frankfurt.
Prosecutors said the raid was connected to the bank's suspicious activity reports (SARs), which were linked to possible money laundering.
The raid has now been linked to a payment made by Rifaat al-Assad, Syrian President Bashar al-uncle. Assad's Last year, he was sentenced to four years in prison in France for money laundering.
Assad is not a client of Deutsche Bank, but the bank did clear at least one payment on behalf of a lender with which Assad had an account. This is believed to have occurred five years ago.
The Assad connection was reported in Germany's Handelsblatt newspaper.
When compliance officials screened their data for Assad-related transactions after his sentencing in France, they discovered the payment, which was then reported to Germany's anti-money laundering authority.
According to a source, the raid was triggered by the late filing of the transaction. Prosecutors believe the lender may have broken the law by failing to report them sooner.
The raid was confirmed by Deutsche Bank, which stated that it would fully cooperate with authorities.
"This is an investigative measure by the Frankfurt public prosecutor’s office in connection with suspicious activity reports [SARs] filed by the bank," Deutsche Bank said in a statement, adding that "Deutsche Bank is fully cooperating with the authorities."
According to the Financial Times, the bank's stock dropped nearly 3% after the raid was announced.
Last year, BaFin ordered Deutsche Bank to improve its anti-money laundering controls. The fincrime watchdog also extended KPMG's and its special representative's mandate to monitor the lender's progress in tightening its internal controls.
BaFin demanded that the bank implement "further appropriate internal safeguards" and adhere to "due diligence obligations."
According to BaFin, the lender needed to address flaws "in particular with regard to regular customer reviews," as well as "correspondent [banking] relationships and transaction monitoring."
In 2018, the German lender's headquarters were raided in connection with alleged money laundering in the bank's wealth management sector over a five-year period.
The criminal investigation into the case was eventually dropped, but the bank was fined €15 million for flaws in its anti-money laundering framework.
The lender announced earlier this week that its first-quarter profit had increased by 17%.
By fLEXI tEAM