WASHINGTON, July 19 (Reuters) - The Federal Reserve said on Wednesday it fined Deutsche Bank and its U.S. affiliates $186 million for failing to sufficiently address money laundering and other shortcomings flagged by the U.S. central bank.
Deutsche must prioritize addressing several of those issues or face "additional and escalated" penalties, said the Fed, which imposed additional restrictions and ordered the bank to improve its risk and data management.
The Fed identified the previous issues in 2015 and 2017 consent orders, which stemmed from deficient controls in Deutsche's relationship with the Estonian branch of Danske Bank which ended in 2015.
In December, Danske Bank pleaded guilty to a bank fraud conspiracy and agreed to forfeit $2 billion to settle a long-running Department of Justice probe into billions of dollars of illicit payments. The bank's Estonia branch allowed some 200 billion euros ($223.78 billion) in funds from high-risk clients in Russia and other countries to flow into the U.S. financial system.
The Biden administration has cracked down on repeat offenders to root out corruption and white collar crime.
In its latest order, the Fed said it found a "significant portion" of the $276 billion in transactions Deutsche cleared for Danske involved "high-risk non-resident customers." Shortcomings in Deutsche's policies on money laundering persisted after its relationship with Danske ended in 2015, the Fed said. ($1 = 0.8937 euros) (Reporting by Pete Schroeder; Editing by Richard Chang)
