New York regulators slapped Deutsche Bank with $150 million in penalties over its relationship with pedophile financier Jeffrey Epstein, officials said Tuesday.
The German bank agreed to the fines in a settlement with the state’s Department of Financial Services, which found it approved transactions that should have raised red flags in light of Epstein’s sex-offender past — including payments to his alleged accomplices, Russian models and other Eastern European women.
“Despite knowing Mr. Epstein’s terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions,” DFS Superintendent Linda Lacewell said in a statement.
Regulators also discovered “procedural failures, mistakes, and sloppiness” in how Deutsche Bank oversaw Epstein’s accounts — starting from the very beginning of their relationship in 2013.
Deutshe Bank officials knew that Epstein — who killed himself in a Manhattan jail last August — had served prison time for having sex with a minor before the feds accused him of sex trafficking last year, the DFS said.
But the bank nonetheless brought him on as a client without having a reputational risk committee review the relationship, regulators say. When the panel finally placed restrictions on Epstein’s accounts, officials said, they weren’t communicated to staffers handling them and were misinterpreted in a way that didn’t change much about how the accounts were monitored, according to state officials.
Detusche Bank officials also did “little or nothing” to figure out how Epstein was spending more than $200,000 in cash each year, regulators found. Epstein’s personal attorney faced little resistance in withdrawing more than $800,000 from his personal accounts over roughly four years, some of which he claimed was needed for “tipping and household expenses,” according to the settlement.
“Whether or to what extent those payments or that cash was used by Mr. Epstein to cover up old crimes, to facilitate new ones, or for some other purpose are questions that must be left to the criminal authorities, but the fact that they were suspicious should have been obvious to bank personnel at various levels,” the settlement reads.
Deutsche Bank reportedly snagged Epstein as a client after JPMorgan Chase dropped in him 2013. The bank finally ended the relationship in November 2018 after the Miami Herald published an exposé on his 2008 Florida plea deal, according to state officials.
The settlement also covers the bank’s failure to act on red flags in its relationships with Danske Bank Estonia and FBME Bank, officials said.
Deutsche Bank — which has 10 days to fork over the $150 million to the state — said it offered to help law-enforcement authorities with their investigation of Epstein immediately following his arrest.
The bank has also invested nearly $1 billion in “training, controls and operational processes” amid the Epstein scandal and boosted the ranks of its anti-financial crime team to more than 1,500 people, a spokesperson said.
“We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes, and have learnt from our mistakes and shortcomings,” a Deutsche Bank spokesperson said in a statement. “Our reputation is our most valuable asset and we deeply regret our association with Epstein.”