Fed to Probe Deutsche Bank Over Suspicious Danske Cash
Source: Bloomberg
The Federal Reserve is examining how Deutsche Bank AG handled billions of dollars in suspicious transactions from Denmark’s leading lender, according to people familiar with the matter, further intensifying what could be one of the biggest money-laundering scandals ever.
The Fed’s probe is in an early stage as it scrutinizes whether Deutsche Bank’s U.S. operations adequately monitored funds from an Estonian branch of Danske Bank A/S, according to two people briefed on the situation, who asked not to be named because the inquiry isn’t public. Danske, which used correspondent banks such as Deutsche Bank to move money abroad, has admitted that much of about $230 billion that flowed through the tiny Estonian outpost may have been dirty.
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The U.S. Department of Justice and criminal authorities from other countries have launched investigations into Danske Bank’s business in Estonia amid accusations it became a European hub for money launderers from the former Soviet Union. The Danish bank was ordered by its domestic regulator to stockpile an extra $1.5 billion in capital to deal with the costs of potential penalties.
Danske relied on the global presence of Deutsche Bank, Bank of America Corp. and JPMorgan Chase & Co. to handle conversions of foreign currencies into U.S. dollars on behalf of its clients from 2007 to as recently as 2015, people familiar with the arrangement have said. Bloomberg reported in November that Deutsche Bank had been contacted by the Justice Department and was thought to have handled the bulk of the transactions under scrutiny. There was no sign at the time that the three firms were themselves targets of the Justice Department’s investigation.
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