Monday 2 March 2020 9:41 am

Deutsche Bank under pressure from UK regulator over compliance failings

The British financial regulator has criticised Deutsche Bank for failing to improve its compliance and anti-money laundering controls, and warned this could threaten the lender’s access to the UK post-Brexit. 

Bank of England regulators have told the German lender they now require monthly updates, as opposed to typical quarterly meetings, according to the Financial Times.

Deutsche Bank was censured and placed under special supervision by the Financial Conduct Authority (FCA) four years ago over “serious” and “systemic” failures in its controls against money laundering, terrorist financing and sanctions breaches. 

Regulators are concerned that compliance issues are still occurring years later, the FT reported, with two compliance blunders occuring at Deutsche Bank since the start of this year.

In January, the bank accidentally sent data relating to thousands of transactions by 500 clients to Amazon, one of its corporate customers, it reported, citing people briefed on the error. 

The bank’s delay in notifying regulators and customers of the breach led to concerns it was close to breaching the FCA’s principle 11, which demands firms are “open and co-operative” in their dealings with regulators. 

Two weeks ago, Deutsche was unable to access the UK’s high-value payments system — known as CHAPS — for three hours in the middle of the day, the paper reported. 

In a statement, a Deutsche Bank spokesperson said it had tripled the number of staff in its anti-financial crime division since 2015.

“The stability and security of our platform is clearly vital to us and we are allocating significant resources to this area to ensure this,” they added. 

The spokesperson declined to comment on Deutsche’s interaction with regulators, but said it was “in close cooperation” with them. 

The Bank of England’s Prudential Regulation Authority (PRA) and FCA have been monitoring Deutsche since 2015, and placed the lender under special supervision a year later. 

They have warned Deutsche that its post-Brexit reauthorisation could be delayed if improvements in compliance are not seen soon, the FT reported, although sources told the paper this remains a remote possibility. 

As a non-British bank, Deutsche is reliant on EU passporting rights to operate in the UK, and is required to go through a reauthorisation process due to Brexit. 

The reviews are supposed to be finished by 31 December, when the post-Brexit transition period comes to an end. 

The FCA and the PRA declined to comment.