Finance

Deutsche Bank shakes up compliance teams

Deutsche Bank is making changes to its anti-financial crimes and compliance teams following years of regulatory scrutiny and enforcement actions, according to a recent internal memo.

The changes, which go into effect July 1, are part of a shift away from fixing specific compliance shortcomings and toward tackling regulatory challenges in a more holistic and efficient manner, Deutsche Bank Chief Administrative Officer Stefan Simon wrote in the memo, which was viewed by The Wall Street Journal.

Deutsche Bank in recent years has been hit with a series of large fines in the US and the UK, including over weakness in anti-money-laundering controls. In January, it agreed to pay $130m to the US government to settle bribery and commodity-trading scheme allegations.

The reorganisation comes after Deutsche Bank in March transferred responsibility for its compliance functions to  Simon from its chief risk officer. Before being appointed chief administrative officer, Simon was a member of Deutsche Bank’s supervisory board and chairman of the board’s integrity committee.

The changes appear to be an effort to increase the clout of the bank’s anti-financial crimes unit, which is responsible for ensuring compliance with anti-money-laundering and anticorruption laws and economic sanctions, among other regulations, compliance experts say.

Deutsche Bank declined to make an executive available for an interview about the changes.

Deutsche Bank is reducing the number of committees and councils within the chief administrative office, and more precisely defining who is responsible for what within the organization, Simon said in the memo.

To make it more effective at fighting financial crime, the bank will give more attention to several core areas, including risk assessment, controls testing and transaction monitoring, he said.

Controls testing — essentially an internal quality assurance team — will be granted greater independence and report directly to Simon, according to the memo.

Deutsche Bank also is moving to consolidate its interactions with regulators. Its project management office, which oversaw its relationship with an independent monitor that was assigned to oversee the bank in the U.S., will be given global remit and become the chief remediation office, Simon said.

“The aim is always to have a global overview of the remediation requirements of our regulators worldwide and to centrally manage these requirements,” Simon said. “Moreover, we will reduce the complexity of our financial crime risk reporting so that we can focus more on [anti-financial crime]’s core tasks.”

Deutsche Bank in May said that Joe Salama, its general counsel in the US, will become the global head of the anti-financial crime unit on 1 July.

Salama, who will split his time between Frankfurt and the US, helped negotiate recent settlements with US authorities, including over failings to properly monitor its dealings with late financier and convicted sex offender Jeffrey Epstein. He was also a key contact for outside monitors checking the implementation of money-laundering controls and for regulators globally, according to the bank.

Carlton Greene, a lawyer specializing in anti-money-laundering compliance at the law firm Crowell & Moring, said the decision to elevate the anti-financial crimes and compliance units to operate alongside the bank’s legal and regulatory functions appears to demonstrate a commitment to strengthening the function’s importance within the company.

At many companies, compliance sits within legal departments and reports up through a chief legal officer or general counsel.

“I take that as a sign, as it clearly seems intended, that they are trying to give that area extra serious attention,”  Greene said.

The changes place Deutsche Bank in line with how other multinational banks are giving attention to anti-money-laundering compliance, Greene added.

“Anti-money-laundering and broader financial crimes compliance looms large among the regulatory obligations that banks face worldwide,” he said. “It increasingly takes up a larger and larger share of their overall regulatory burden.”

Write to Dylan Tokar at [email protected]

This article was published by Dow Jones Newswires

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