Deutsche Bank for years overlooked suspicious transactions by convicted sex offender Jeffrey Epstein —including wire transfers to Russian models —despite classifying him as "high risk" when taking on the well known financier as a banking customer in 2013.
That's according to the New York Department of Financial Services, which on Tuesday announced a $150 million settlement with the Germany-based lender.
The bank's New York offices for years let Epstein's questionable account activity go largely unchecked, setting aside due diligence basics in favor of focusing on the potential revenue that Epstein might generate for the bank, as well as his ties to possibly lucrative future clients, according to the regulator.
"Despite knowing Mr. Epstein's terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions," Linda Lacewell, the department's superintendent, said in a statement.
"Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system," Lacewell noted, "and it is fundamental that banks tailor the monitoring of their customers' activity based upon the types of risk that are posed by a particular customer."
The financier's dubious transactions include $2.65 million in 120 wire transfers to people including three named as co-conspirators in lawsuits related to Epstein's 2008 guilty plea to prostitution charges in Florida, according to the settlement accord. The three are not named in the settlement document, which cited published reports of the suits, including one allegedly involving accusations of recruiting girls for Epstein.
Deutsche Bank ultimately decided to drop Epstein as a client in late 2018, after the Miami Herald detailed some of the generous terms of Epstein's sentencing accord with federal prosecutors from a decade earlier, but still drafted reference letters on his behalf to send to other banks, the regulator said.
The bank, which cooperated with New York investigators, agreed to the details of the consent order and acknowledged mistakes were made.
"Today serves as a reminder of how vigilant we must remain," Deutsche Bank CEO Christian Sewing said in a statement to employees. Noting the bank's former relationship with Epstein, Sewing wrote that bringing him on as a client was "a critical mistake and should never have happened."
The bank had spent nearly $1 billion to improve its anti-money-laundering controls, it said in a separate statement on social media.
Epstein committed suicide in a New York City jail cell last year at age 66 while awaiting trial on federal sex trafficking charges.
Ghislaine Maxwell, a longtime friend and business associate of Epstein, wasin New York with helping recruit teenage girls later sexually abused by Epstein at his various estates.
The New York settlement announced Tuesday is not the first fine Deutsche Bank has incurred for violating anti-money-laundering laws. The bank in 2015 agreedto settle claims it manipulated interest rates set by the London interbank offered rate, or Libor.
The Germanand his family businesses have also drawn attention, and has prompted subpoenas from congressional investigators.