|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.