Should Deutsche Bank have taken on a dubious client like later convicted sex offender Jeffrey Epstein and managed his assets? The New York banking regulator said no to this question in 2020 and fined Germany’s largest financial institution $150 million. led to justification the bank supervisors at the time even made out which managers were involved when the money house accepted Epstein as a customer – but without naming names. Epstein was a customer from 2013 to 2018, a “serious mistake”, as CEO Christian Sewing later admitted.
Deutsche Bank is now faced with new lawsuits in the USA. A group of unnamed women accuses the money house and the major US bank JP Morgan of having benefited financially from the hedge fund manager who has since died. The banks gave Epstein the appearance of legitimacy through their services and thus also encouraged the continued sexual abuse of young women and girls. The women have filed two separate lawsuits in federal district court in New York seeking class status. Deutsche Bank said: “We consider this allegation to be unfounded and will present our arguments in court.” JP Morgan declined to comment.
Hedge fund manager Epstein was arrested on suspicion of sex trafficking in 2019, more than a decade after he pleaded guilty in a Florida court to the forced prostitution of a minor. His death in prison in August 2019 was ruled a suicide. His confidante Ghislaine Maxwell was sentenced to 20 years in prison this summer.
The women’s lawsuit isn’t the first civil lawsuit to follow the fine: just last September, the bank settled a $26 million lawsuit with investors. The plaintiffs, who traded in the bank’s shares between 2018 and 2020, accused the bank of lax anti-money laundering controls. The institute has presented advances in this area far too positively, which has driven the share price up. The bank has claimed that risky customer relationships are consistently terminated. Instead, the plaintiffs allege, executives overruled concerns raised by compliance staff in the asset management department. When the bank was fined for its relationship with Epstein and other offenses, the price fell, hurting investors.
The bank does not want to comment on whether the division head at the time, Sewing, knew about Epstein
In the bank leadership, Michele Faissola was in charge of wealth management when Epstein became a client in 2013. From 2015, the current CEO Sewing was temporarily responsible for the division, followed by Fabrizio Campelli, now investment bank board member. Faissola said he was never involved in any customer relationship decision with Epstein, nor did he know that Epstein was a customer until it was mentioned in the press. An internal investigation reportedly found no wrongdoing. It is not publicly known whether Sewing and Campelli knew anything about the customer relationship. The bank declined to comment. The money house had taken over the banking relationship from JP Morgan in 2013, which had also not looked closely. Epstein was a customer of the super-rich business, which also included ex-President Donald Trump. At one point, Epstein had over $560 million.
Banks have to check whether their customers’ money comes from illegal transactions. Deutsche Bank has been asserting for years that it will strengthen controls, but has repeatedly noticed deficits in this area. Only at the beginning of November did the financial regulator Bafin threaten a fine if the bank did not implement measures by 2023. At the same time, the people of Frankfurt want to go back advertise more for rich customers – for example in high-risk countries like Saudi Arabia.