Monday, May 20, 2019

Deutsche Bank officials ignored warnings of suspicious activity in Trump and Kushner accounts, adding fire to an already smoky story of possible money laundering

Deutsche Bank office in Jacksonville, FL

Officials at a German bank ignored employee warnings about possible money laundering involving members of the Trump family and overseas entities (including some in Russia), according to a report yesterday at The New York Times. An employee at a Deutsche Bank branch in Jacksonville, Florida, was fired after raising concerns about the transactions.

Tammy McFadden was terminated last year after raising concerns about Deutsche Bank's lax enforcement of anti-money laundering practices, especially when high-level clients were involved. McFadden since has filed complaints with the Securities and Exchange Commission and other regulators. Writes Times reporter David Enrich:

Anti-money laundering specialists at Deutsche Bank recommended in 2016 and 2017 that multiple transactions involving legal entities controlled by Donald J. Trump and his son-in-law, Jared Kushner, be reported to a federal financial-crimes watchdog.

The transactions, some of which involved Mr. Trump’s now-defunct foundation, set off alerts in a computer system designed to detect illicit activity, according to five current and former bank employees. Compliance staff members who then reviewed the transactions prepared so-called suspicious activity reports that they believed should be sent to a unit of the Treasury Department that polices financial crimes.

But executives at Deutsche Bank, which has lent billions of dollars to the Trump and Kushner companies, rejected their employees’ advice. The reports were never filed with the government.

The nature of the transactions was not clear. At least some of them involved money flowing back and forth with overseas entities or individuals, which bank employees considered suspicious.

The flagged activity at Deutsche Bank coincides with the 2016 presidential campaign, The Times reports:

In the summer of 2016, Deutsche Bank’s software flagged a series of transactions involving the real estate company of Mr. Kushner, now a senior White House adviser.

Ms. McFadden, a longtime anti-money laundering specialist in Deutsche Bank’s Jacksonville office, said she had reviewed the transactions and found that money had moved from Kushner Companies to Russian individuals. She concluded that the transactions should be reported to the government — in part because federal regulators had ordered Deutsche Bank, which had been caught laundering billions of dollars for Russians, to toughen its scrutiny of potentially illegal transactions.

Ms. McFadden drafted a suspicious activity report and compiled a small bundle of documents to back up her decision.

Typically, such a report would be reviewed by a team of anti-money laundering experts who are independent of the business line in which the transactions originated — in this case, the private-banking division — according to Ms. McFadden and two former Deutsche Bank managers.

That did not happen with this report. It went to managers in New York who were part of the private bank, which caters to the ultrawealthy. They felt Ms. McFadden’s concerns were unfounded and opted not to submit the report to the government, the employees said.

Ms. McFadden and some of her colleagues said they believed the report had been killed to maintain the private-banking division’s strong relationship with Mr. Kushner.

Did bank officials take the money-laundering concerns more seriously after Mr. Trump became President Trump? No, they did not:

After Mr. Trump became president, transactions involving him and his companies were reviewed by an anti-financial crime team at the bank called the Special Investigations Unit. That team, based in Jacksonville, produced multiple suspicious activity reports involving different entities that Mr. Trump owned or controlled, according to three former Deutsche Bank employees who saw the reports in an internal computer system.

Some of those reports involved Mr. Trump’s limited liability companies. At least one was related to transactions involving the Donald J. Trump Foundation, two employees said.

Deutsche Bank ultimately chose not to file those suspicious activity reports with the Treasury Department, either, according to three former employees. They said it was unusual for the bank to reject a series of reports involving the same high-profile client.

The Trump relationship with Deutsche Bank already was in the news when yesterday's story broke:

Deutsche Bank’s decision not to report the transactions is the latest twist in Mr. Trump’s long, complicated relationship with the German bank — the only mainstream financial institution consistently willing to do business with the real estate developer.

Congressional and state authorities are investigating that relationship and have demanded the bank’s records related to the president, his family and their companies. Subpoenas from two House committees seek, among other things, documents related to any suspicious activities detected in Mr. Trump’s personal and business bank accounts since 2010, according to a copy of a subpoena included in a federal court filing.

Mr. Trump and his family sued Deutsche Bank in April, seeking to block it from complying with the congressional subpoenas. The president’s lawyers described the subpoenas as politically motivated.

Deutsche Bank already has been under scrutiny for its willingness to deal in dirty money. Reports The Times:
In the past few years, United States and European authorities have punished Deutsche Bank for helping clients, including wealthy Russians, launder funds and for moving money into countries like Iran in violation of American sanctions. The bank has paid hundreds of millions of dollars in penalties and is operating under a Federal Reserve order that requires it to do more to stop illicit activities.

On two palm-tree-lined campuses in Jacksonville, Deutsche Bank has thousands of employees who vet customers and transactions. Six current and former bank employees there said the operations were deeply troubled.

Anti-money laundering workers were pressured to quickly sift through transactions to assess whether they were suspicious, the employees said. As a result, they often erred on the side of not flagging transactions.

Two former employees said that they had raised concerns about transactions involving companies linked to prominent Russians, but that managers had told them not to file suspicious activity reports. The employees were under the impression that the bank did not want to upset important clients.

Where is this story headed? It's probably too early to say with any certainly, but Grant Stern, of Washington Press, says it has bombshell potential:

Deutsche Bank is notorious for skirting the wrong side of the law when it comes to money laundering scandals, especially when the clients are Russian oligarchs. Perhaps coincidentally, they’re also the only major bank willing to do business with perpetual disaster Donald Trump, lending both he and his son-in-law’s family real estate companies billions of dollars over the past few years. . . .

McFadden believed that the independent anti-money laundering experts at the bank would review her work and report it to the Treasury Department’s clearinghouse for those reports, the Financial Crimes Enforcement Network (FinCEN).

In fact, its Jacksonville based Special Investigations Unit did look at its history with Trump and recommend the bank should file anti-money laundering SARs.

But Deutsche Bank routed the review back to the private banking division who handles Donald Trump’s accounts, where he worked with the son of former Supreme Court Justice Anthony Kennedy as his personal account representative until recently. Trump’s businesses have borrowed $2.5 billion from Deutsche Bank to fund prominent properties like the Washington Trump hotel and a Miami golf course.

The story of possible Trump ties to money laundering is not likely to go away soon. Writes Stern:

Tammy McFadden alerted the S.E.C and an alphabet soup of bank regulators who can all investigate her story.

It’s no wonder that the House Financial Services Committee led by Chairwoman Maxine Waters (D-CA) just subpoenaed Deutsche Bank last month to find out more about their relationship with President Trump. The bank had reportedly already been cooperating with House Dems, but today’s news adds a lot more smoke to what appears to be a real fire under the entire White House.

The President has a lot to fear from House Democrats revealing the truth about both his transactions with Deutsche Bank and the details of their relationship.


Anonymous said...

That sound you hear is the White House starting to implode.

Anonymous said...

Pretty suspicious that one of the main whistle blowers was fired after helping to flag these transactions as money laundering.

Anonymous said...

Deutsche Bank = Laundromat

Anonymous said...

Deutsche Bank has a big presence in Jacksonville, FL? Who knew?

Anonymous said...

This could turn out to be one of the biggest stories in the history of journalism. Props to NYT and to the whistle blowers.

legalschnauzer said...

How does the Deutsche Bank story link to this story?

Law enforcement, congressional, and media investigations over the last two years have revealed that Kremlin-linked actors paid considerable sums of money to support Trump and curry his favor. A Russian organization allegedly controlled by an oligarch close to Putin spent more than $1 million a month just on social media campaigns favoring Trump, according to the special counsel.6 A Russian American energy tycoon—who boasted to a Kremlin official in July 2016 of being “actively involved in Trump’s election campaign”—donated hundreds of thousands of dollars to the Trump Victory fund.7 And a company affiliated with a sanctioned Russian oligarch paid $1 million to Michael Cohen, then Trump’s personal lawyer, for unspecified services after the election.8 These and other transactions examined throughout the report establish that, during the campaign and presidential transition, Trump had several compromising financial entanglements with actors representing a hostile foreign power.

legalschnauzer said...

Let's not forget the Alabama connection to all of this. Thank you, Jeff Sessions:

It is not unusual for discussions of foreign political influence operations to pivot to embassies.53 Former Russian Ambassador Sergey Kislyak, in particular, is a key figure in the narrative of alleged collusion between the Russian government and the Trump campaign.54 He held a series of secret meetings with Trump campaign officials, including Trump’s son-in-law and adviser Jared Kushner, former U.S. Attorney General Jeff Sessions, former national security adviser Michael Flynn, former Trump campaign foreign policy adviser Carter Page, and former Trump campaign policy adviser J.D. Gordon.55 During one private meeting Kislyak held with Kushner and Flynn, they reportedly discussed the possibility of establishing a secure communications channel between the Kremlin and the Trump campaign.

legalschnauzer said...

How might Deutsche Bank story connect to this story from early 2017?

The FBI and five other law enforcement and intelligence agencies have collaborated for months in an investigation into Russian attempts to influence the November election, including whether money from the Kremlin covertly aided President-elect Donald Trump, two people familiar with the matter said.

The agencies involved in the inquiry are the FBI, the CIA, the National Security Agency, the Justice Department, the Treasury Department’s Financial Crimes Enforcement Network and representatives of the director of national intelligence, the sources said.

Investigators are examining how money may have moved from the Kremlin to covertly help Trump win, the two sources said. One of the allegations involves whether a system for routinely paying thousands of Russian-American pensioners may have been used to pay some email hackers in the United States or to supply money to intermediaries who would then pay the hackers, the two sources said.

legalschnauzer said...

Here is a 2018 followup from McClatchy, focusing on the NRA as a possible conduit of Russian money to Trump:

The FBI is investigating whether a top Russian banker with ties to the Kremlin illegally funneled money to the National Rifle Association to help Donald Trump win the presidency, two sources familiar with the matter have told McClatchy.

FBI counterintelligence investigators have focused on the activities of Alexander Torshin, the deputy governor of Russia’s central bank who is known for his close relationships with both Russian President Vladimir Putin and the NRA, the sources said.

It is illegal to use foreign money to influence federal elections.

It’s unclear how long the Torshin inquiry has been ongoing, but the news comes as Justice Department Special Counsel Robert Mueller’s sweeping investigation of Russian meddling in the 2016 election, including whether the Kremlin colluded with Trump’s campaign, has been heating up.

Anonymous said...

This story seems to link everyone and all the stories from the past 18 months--collusion, Russian Money, Trump businesses and family, employees, appointees, political action committees, and so on. Also, it has always been easier to get a loan for 100 million dollars from a bank than a loan for 100,000 dollars from a bank. They like to loan out huge amounts with little to no collateral.

Anonymous said...

Deutsche Banks: Where criminals go to finance their crimes.

legalschnauzer said...

Trump's response to Deutsche Bank report:

"I didn't need money."

No kidding.

legalschnauzer said...

Here is more on Trump response:

The Failing New York Times (it will pass away when I leave office in 6 years), and others of the Fake News Media, keep writing phony stories about how I didn’t use many banks because they didn’t want to do business with me. WRONG! It is because I didn’t need money. Very old

....fashioned, but true. When you don’t need or want money, you don’t need or want banks. Banks have always been available to me, they want to make money. Fake Media only says this to disparage, and always uses unnamed sources (because their sources don’t even exist).....

-- Donald Trump

legalschnauzer said...

An MSNBC panel discusses the Deutsche Bank story . . .