By Mark McSherry
New York State’s Superintendent of Financial Services Linda Lacewell said on Tuesday that Deutsche Bank has agreed to pay $150 million in penalties for “significant compliance failures” in connection with the bank’s relationship with registered sex offender Jeffrey Epstein.
The action also covers “correspondent banking relationships” with Danske Bank Estonia and FBME Bank.
New York State Department of Financial Services said this agreement marks the first enforcement action by a regulator against a financial institution for dealings with Jeffrey Epstein.
“Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system, 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,” said Lacewell.
“In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the bank itself deemed to be high risk.
“In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein’s terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions.”
Lacewell said the bank failed to properly monitor account activity conducted on behalf of the registered sex offender despite ample information that was publicly available concerning the circumstances surrounding Epstein’s earlier criminal misconduct.
Lacewell said the result was that the bank processed hundreds of transactions totaling millions of dollars that, at the very least, should have prompted additional scrutiny in light of Epstein’s history, including:
- payments to individuals who were publicly alleged to have been Epstein’s co-conspirators in sexually abusing young women;
- settlement payments totaling over $7 million, as well as dozens of payments to law firms totaling over $6 million for what appear to have been the legal expenses of Epstein and his co-conspirators;
- payments to Russian models, payments for women’s school tuition, hotel and rent expenses, and (consistent with public allegations of prior wrongdoing) payments directly to numerous women with Eastern European surnames;
- periodic suspicious cash withdrawals — in total, more than $800,000 over approximately four years.