Deutsche Bank is reportedly being investigated by the US Department of Justice over whether it violated anti-money laundering laws in its work with scandal-hit Malaysian state fund 1MDB.
US officials are understood to be probing the German lender over its ties with the 1MDB investment vehicle between the years of 2009 and 2014, when billions of dollars were looted and spent on items including luxury yachts and expensive pieces of art.
The news, first reported by the Wall Street Journal, is a fresh headache for the European banking giant as it embarks on a major restructuring plan that involves thousands of job cuts and the closure of its loss-making equities business.
Sources told the Wall Street Journal that the bank’s ties with 1MDB included helping it to raise $1.2bn in 2014 while concerns began to rise over management and the balance sheet.
The paper said that prosecutors are predominantly looking into Tan Boon-Kee, a colleague of a former Goldman Sachs executive Tim Leissner, who worked with him on 1MDB-related business.
In a statement the German lender said: “Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB.”
It added: “As stated in asset forfeiture complaints filed by the US Department of Justice, 1MDB made ‘material misrepresentations and omissions to Deutsche Bank officials’ in connection with 1MDB’s transactions with the bank. This is consistent with the bank’s own findings in this matter.”
Deutsche Bank’s share price, which has fallen just under one per cent today, has tumbled by more than 10 per cent since the start of this week, as investors uncertainty loomed over the outlook of the firm’s latest cost-cutting overhaul.