FT : Deutsche Bank anti-money laundering software hampered by glitch
Systems fault prevented flagging of potentially suspicious payments for nearly a decade
Deutsche Bank employees discovered a software glitch late last year in the lender’s anti-money laundering software that for almost a decade prevented the flagging of some potentially suspicious clients’ payments to law enforcement authorities, it emerged on Wednesday.
The revelation, which was first reported by Süddeutsche Zeitung, comes a day ahead of a potentially tumultuous shareholder meeting, where some investors will call for the ousting of Deutsche Bank chairman Paul Achleitner after the bank’s share price this week fell to a new all-time low.
A Deutsche Bank spokesman said that one of the bank’s several anti-financial crime systems was affected. The software, which was put in place around 2010, was designed to retrospectively to look for suspicious patterns of payments processed by clients of the corporate and investment bank.
“Two of 121 parameters of this IT system were not properly calibrated,” said the bank in a statement issued on Wednesday morning, adding that the fault was discovered by employees of its anti financial crime unit after it started to improve its internal processes last autumn.
“The bank is working on fixing the issue as quickly as possible and is in a close dialogue with regulators about it,” it said.
A person familiar with the matter told the Financial Times that the lender is currently assessing the potential fallout of the software glitch and so know does not know how many, if any, suspicious transactions were not flagged to authorities. As the bank has several overlapping systems in place, it is possible that dubious transactions missed by one were still caught by another.
Last September, German banking watchdog BaFin publicly rebuked Deutsche Bank for poor anti-money laundering systems. In an unprecedented step, the regulator appointed an independent auditor to check the lender’s progress in improving its internal processes for three years.
In February, BaFin widened the auditor’s remit and commissioned him to also look into Deutsche’s role in the Danske Bank Estonia money laundering scandal. Danske is under investigation for processing €200bn of money that flowed through its Estonian unit on behalf of non-resident customers from Russia and other former Soviet states between 2007 and 2015. Deutsche Bank was one of several correspondent banks used by Danske’s Estonian branch, with the German lender clearing more than €160bn of potentially suspicious cross-border payments for the unit.
Deutsche’s chief regulatory officer Sylvie Matherat is likely to be replaced over the coming months, people close to the lender’s supervisory board told the Financial Times.
The former French central bank official has a contract until 2023 but she has been under pressure due to the lender’s ongoing issues in that area. Replacing Ms Matherat “is just a question of when, rather than if”, according to one person close to the supervisory board.