Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

It's tricky to give a directory of the top 5 sports accomplishments without stepping on someone's toes, however, these end up being viewed as breathtaking achievements, it doesn't matter who your favorite athlete might be. The top five sporting achievements of them all:

1 - 1980 American Olympic Hockey Team

No one gave the teenage boys who had only played together awhile much chance contrary to the Soviets. The Russians were considered the very best team from the world. In 1979, they shown their dominance by defeating the NHL All Stars 6-0. When the U.S. team went to the Olympic finals, it only agreed to be a matter for most people's minds in respect of how bad they would be defeated. Against all odds, they won 4-3. Sports Illustrated voted this game since the greatest sports moment of the 20th century.

2 - Jesse Owens 1936 Olympics

Adolph Hitler desired to show Germany's superiority while in the Olympic Games when these were residing in Berlin in 1936. His basic lies and propaganda were packed with hatred for any individual apart from the white race. Jesse Owens position the nonsense to nap rather well by winning 4 gold medals against the Fuehrer's athletes.

Does greed blind bankers from filing Suspicious Activity Reports (SARs)?

Getty

The more information comes out in dribs and drabs about and from Deutsche Bank, I remain convinced that something is truly rotten there. But is that the only bank that has these operational risk management problems?

David Enrich of the New York Times, wrote recently that reportedly, five current and former Deutsche Bank, anti-money-laundering professionals found in 2016 and 2017 that multiple transactions involving legal entities controlled by Donald Trump and his son-in-law, Jared Kushner, set off alerts in a computer system designed to detect illicit activity. These alerts reportedly led compliance staff members to review the transactions and to report suspicious activity reports (SARs) to senior managers that they believed should be sent to the Financial Crimes Enforcement Network (FinCEN), a US Treasury Department that polices financial crimes.

U.S. Sen. Sherrod Brown, D-Ohio

A good outcome has been  that Enrich’s article led Senators Sherrod Brown and Chris Van Hollen to write Deutsche Bank CEO Christian Sewing with a number of important questions about Deutsche Bank’s SARs processes. With any luck, Herr Sewing will respond by the requested date of May 30. Other bank executives would benefit by taking a good luck at Brown's and Van Hollen's letter.

Sen. Chris Van Hollen, D-Md.

When I match Enrich’s account with the good step-by-step explanation by Bloomberg’s Yalman Onaran of how SARs are supposed to work, “What’s Suspicious? Here’s How Banks Apply the Smell Test,” the compliance officers did what they are supposed to do.  Why then did Deutsche Bank executives ignore the advice of compliance officers both in 2016 and 2017 and not file SARs reports? And if this happens at Deutsche Bank, what assurances do we have from bank risk managers and bank regulators that Deutsche like behavior is not happening on a daily basis at other big banks?

According to Ross Delston, a lawyer and international anti-money laundering expert, alerts that arise at any financial institution (FI) must be followed up by the FI. Further, after an alert is investigated and the FI verifies that suspicious activities are confirmed, a SAR must be filed.  The failure to do either or both can have serious consequences.  “In such cases, there should be an investigation by the Feds as to whether there were willful violations of the Bank Secrecy Act (BSA), including the Anti-Money Laundering (AML) program requirements and SAR reporting requirements, which if willful, could be a criminal offense, and if not willful, a civil violation, that in either case could lead to millions in fines and penalties.”

Ross Delston

Ross S. Delston Law Office

Importantly, now that this information is out in the public domain, we should all be asking what are American and European off-site supervisors and on-site bank examiners with responsibility for Deutsche Bank, and for that matter other internationally active banks, going to do? The European Central Bank,  German regulator BaFin, and the German central bank, Deutsche Bundesbank, are responsible for the consolidated supervision of Deutsche Bank. In February of this year, BaFin ordered Deutsche Bank to review its risk management processes in correspondent banking in order to prevent money laundering and terrorism financing. BaFin has expanded the mandate of a special monitoring representative it had appointed on September 2018.

In the U.S. the Federal Reserve Board, the Federal Reserve Bank of New York and the New York Department of Financial Services are responsible for supervising and examining Deutsche Bank’s activities in the U.S. The Federal Financial Examination Institutions Council’s, Suspicious Activity Overview of the Bank Secrecy Act Anti-Money Laundering Examination Manual states that “FinCEN and the federal banking agencies recognize that, as a practical matter, it is not possible for a bank to detect and report all potentially illicit transactions that flow through the bank.” Yet the online manual clearly states that “Examiners should focus on evaluating a bank’s policies, procedures, and processes to identify, evaluate, and report suspicious activity. However, as part of the examination process, examiners should review individual SAR filing decisions to determine the effectiveness of the banks’ suspicious activity identification, evaluation, and reporting process.” In other words, the Federal Reserve Bank’s examiners can ask for all the documentation with the SAR filing decisions taken in respect to Trump and Kushner and analyze whether all processes and procedures were followed correctly. Remember, Fed examiners are not investigators. That is the job of FinCEN. Yet examiners, can make sure that rules and guidelines around anti-money laundering and SARs filings are being followed.

Given that rules for banks and procedures for bank examiners related to SARs are clear, why do banks sometimes fail to file SARs?  When I spoke to Delston, he explained that investigation of alerts resulting in a decision to file a SAR should lead to a series of actions by the bank, including –

  • Conducting Enhanced Due Diligence (EDD) on the customer;
  • Comparing expected transactions to actual transactions to see if there are anomalies between what was disclosed by the customer at the onboarding with the customer’s usage of the account;
  • Raising the customer’s risk rating, which would cause more frequent Customer due Diligence (CDD)/Know Your Customer (KYC) refresh, typically annually for the highest risk category;
  • Heightened monitoring; and
  • Depending on all of the above, could ultimately lead to a decision by the bank as to whether they should keep the customer.
Due to the amount of personnel, time, and costs involved to follow the steps outlined by Delston, I cannot help but wonder whether the desire to save on compliance costs and the obsession not to lose potentially profitable clients, convinces senior management and executives not to do the right thing, not only at Deutsche Bank, but possibly at other financial institutions. It is critical that bank and financial regulators, as well as legislators, research and investigate these media reports seriously.

In addition to outstanding questions about money laundering, there is still the unanswered question of whether Trump committed bank fraud when he requested multiple loans from Deutsche Bank. In a piece I wrote in April this year, I included the questions that bank supervisors and bank examiners typically should ask when trying to determine if an individual committed bank fraud. If Trump inflated his net worth, then the banks and federal authorities should be looking into this with serious urgency.

Until Deutsche Bank can accurately answer questions about its anti-money laundering and fraud detection processes and procedures, as I wrote in April, Deutsche Bank needs to increase its capital for operational risk to sustain unexpected losses due to breaches in the day-to-day running of a firm due to people, processes, systems, and pay higher fines in order to stop its money laundering and fraud recidivism. Taxpayers should not bear losses that could end up happening due to Deutsche Bank’s weak operational risk.

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Does greed blind bankers from filing Suspicious Activity Reports (SARs)?

Getty

The more information comes out in dribs and drabs about and from Deutsche Bank, I remain convinced that something is truly rotten there. But is that the only bank that has these operational risk management problems?

David Enrich of the New York Times, wrote recently that reportedly, five current and former Deutsche Bank, anti-money-laundering professionals found in 2016 and 2017 that multiple transactions involving legal entities controlled by Donald Trump and his son-in-law, Jared Kushner, set off alerts in a computer system designed to detect illicit activity. These alerts reportedly led compliance staff members to review the transactions and to report suspicious activity reports (SARs) to senior managers that they believed should be sent to the Financial Crimes Enforcement Network (FinCEN), a US Treasury Department that polices financial crimes.

U.S. Sen. Sherrod Brown, D-Ohio

A good outcome has been  that Enrich’s article led Senators Sherrod Brown and Chris Van Hollen to write Deutsche Bank CEO Christian Sewing with a number of important questions about Deutsche Bank’s SARs processes. With any luck, Herr Sewing will respond by the requested date of May 30. Other bank executives would benefit by taking a good luck at Brown's and Van Hollen's letter.

Sen. Chris Van Hollen, D-Md.

When I match Enrich’s account with the good step-by-step explanation by Bloomberg’s Yalman Onaran of how SARs are supposed to work, “What’s Suspicious? Here’s How Banks Apply the Smell Test,” the compliance officers did what they are supposed to do.  Why then did Deutsche Bank executives ignore the advice of compliance officers both in 2016 and 2017 and not file SARs reports? And if this happens at Deutsche Bank, what assurances do we have from bank risk managers and bank regulators that Deutsche like behavior is not happening on a daily basis at other big banks?

According to Ross Delston, a lawyer and international anti-money laundering expert, alerts that arise at any financial institution (FI) must be followed up by the FI. Further, after an alert is investigated and the FI verifies that suspicious activities are confirmed, a SAR must be filed.  The failure to do either or both can have serious consequences.  “In such cases, there should be an investigation by the Feds as to whether there were willful violations of the Bank Secrecy Act (BSA), including the Anti-Money Laundering (AML) program requirements and SAR reporting requirements, which if willful, could be a criminal offense, and if not willful, a civil violation, that in either case could lead to millions in fines and penalties.”

Ross Delston

Ross S. Delston Law Office

Importantly, now that this information is out in the public domain, we should all be asking what are American and European off-site supervisors and on-site bank examiners with responsibility for Deutsche Bank, and for that matter other internationally active banks, going to do? The European Central Bank,  German regulator BaFin, and the German central bank, Deutsche Bundesbank, are responsible for the consolidated supervision of Deutsche Bank. In February of this year, BaFin ordered Deutsche Bank to review its risk management processes in correspondent banking in order to prevent money laundering and terrorism financing. BaFin has expanded the mandate of a special monitoring representative it had appointed on September 2018.

In the U.S. the Federal Reserve Board, the Federal Reserve Bank of New York and the New York Department of Financial Services are responsible for supervising and examining Deutsche Bank’s activities in the U.S. The Federal Financial Examination Institutions Council’s, Suspicious Activity Overview of the Bank Secrecy Act Anti-Money Laundering Examination Manual states that “FinCEN and the federal banking agencies recognize that, as a practical matter, it is not possible for a bank to detect and report all potentially illicit transactions that flow through the bank.” Yet the online manual clearly states that “Examiners should focus on evaluating a bank’s policies, procedures, and processes to identify, evaluate, and report suspicious activity. However, as part of the examination process, examiners should review individual SAR filing decisions to determine the effectiveness of the banks’ suspicious activity identification, evaluation, and reporting process.” In other words, the Federal Reserve Bank’s examiners can ask for all the documentation with the SAR filing decisions taken in respect to Trump and Kushner and analyze whether all processes and procedures were followed correctly. Remember, Fed examiners are not investigators. That is the job of FinCEN. Yet examiners, can make sure that rules and guidelines around anti-money laundering and SARs filings are being followed.

Given that rules for banks and procedures for bank examiners related to SARs are clear, why do banks sometimes fail to file SARs?  When I spoke to Delston, he explained that investigation of alerts resulting in a decision to file a SAR should lead to a series of actions by the bank, including –

  • Conducting Enhanced Due Diligence (EDD) on the customer;
  • Comparing expected transactions to actual transactions to see if there are anomalies between what was disclosed by the customer at the onboarding with the customer’s usage of the account;
  • Raising the customer’s risk rating, which would cause more frequent Customer due Diligence (CDD)/Know Your Customer (KYC) refresh, typically annually for the highest risk category;
  • Heightened monitoring; and
  • Depending on all of the above, could ultimately lead to a decision by the bank as to whether they should keep the customer.
Due to the amount of personnel, time, and costs involved to follow the steps outlined by Delston, I cannot help but wonder whether the desire to save on compliance costs and the obsession not to lose potentially profitable clients, convinces senior management and executives not to do the right thing, not only at Deutsche Bank, but possibly at other financial institutions. It is critical that bank and financial regulators, as well as legislators, research and investigate these media reports seriously.

In addition to outstanding questions about money laundering, there is still the unanswered question of whether Trump committed bank fraud when he requested multiple loans from Deutsche Bank. In a piece I wrote in April this year, I included the questions that bank supervisors and bank examiners typically should ask when trying to determine if an individual committed bank fraud. If Trump inflated his net worth, then the banks and federal authorities should be looking into this with serious urgency.

Until Deutsche Bank can accurately answer questions about its anti-money laundering and fraud detection processes and procedures, as I wrote in April, Deutsche Bank needs to increase its capital for operational risk to sustain unexpected losses due to breaches in the day-to-day running of a firm due to people, processes, systems, and pay higher fines in order to stop its money laundering and fraud recidivism. Taxpayers should not bear losses that could end up happening due to Deutsche Bank’s weak operational risk.

3 - Secretariat's Triple Crown

The naysayers belief that Secretariat would fade in your third and longest race of the Triple Crown. Many horses before tried well while in the Kentucky Derby as well as the Preakness, but gets hotter located the Belmont Stakes they'd faltered. The nice horse gave the impression to are nourished by this and left another competitor within the dust in the most lopsided wins inside good reputation for the sport.

4 - Wilt Chamberlain's 100 Point Game

That it was on March 2, 1962 in Hershey, Pennsylvania. There has been many great players with amazing performances ever since then, but none have approached this feat. Situation goes utilizing 46 seconds left, Wilt the Stilt performed a slam-dunk off an alley-oop hitting the century mark. Over 200 in the paying spectators stormed down from your stands to try to the touch the super star. In line with the NBA, the final seconds of the overall game were never played.

5 - Michael Phelps 8 Gold Medals

Everyone felt that Mark Spitz had accomplished what not any other man could ever wish to achieve regarding his 7 gold medals won in swimming. Inside Summer Olympics of 2008, Michael Phelps not simply won a different, but he set 7 new records within the process. Needless to say, you will always find new accomplishments to be produced in the concept of sports and also the field is open up for brand spanking new achievements with every day that passes.

Source : https://www.forbes.com/sites/mayrarodriguezvalladares/2019/05/26/does-greed-drive-deutsche-bank-and-other-banks-not-to-file-suspicious-activity-reports/

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?

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Does Greed Drive Deutsche Bank And Other Banks Not To File Suspicious Activity Reports?