Deutsche Bank has admitted it made a “critical mistake” taking on the registered sex offender Jeffrey Epstein as a client, and agreed to pay a $150m fine to settle New York charges over its dealings with the late disgraced financier and two other banks.
The settlement with the New York state department of financial services is the first regulatory enforcement move against a bank related to Epstein. He killed himself last August in a Manhattan jail after he was arrested on charges that he abused and trafficked in women and girls in New York and Florida between 2002 and 2005.
New York’s governor, Andrew Cuomo, said in a statement: “For years, Mr Epstein’s criminal, abusive behavior was widely known, yet big institutions continued to excuse that history and lend their credibility or services for financial gain.”
New York faulted Deutsche Bank’s “significant compliance failures” in its dealings with Epstein, as well as with Danske Bank’s Estonia branch, which is embroiled in a money laundering scandal, and the Federal Bank of the Middle East (FBME).
It said Deutsche Bank considered Epstein “high-risk” and knew of his history of sex trafficking and abuse, including his 2007 guilty plea to state prostitution charges, yet processed hundreds of transactions “obviously implicated” by his past.
These included payments to alleged accomplices “who were publicly alleged to have been Epstein’s co-conspirators in sexually abusing young women”, lawyers and victims.
Transactions also included “settlement payments totaling over $7m, as well as dozens of payments to law firms totaling over $6m for what appear to have been the legal expenses of Epstein and his co-conspirators”, as well as “payments to Russian models, payments for women’s school tuition, hotel and rent expenses, and (consistent with public allegations of prior wrongdoing) payments directly to numerous women with eastern European surnames”, the FDS said.
“Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system,” Linda Lacewell, the superintendent of the DFS, said in a statement. “In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the bank itself deemed to be high risk.
“In the case of Jeffrey Epstein in particular, despite knowing Mr Epstein’s terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions.”
Epstein was a Deutsche Bank client from August 2013 to December 2018, when the relationship ended following additional negative press about his misconduct.
The New York settlement reflected Deutsche Bank’s cooperation over several years.
“Onboarding [Epstein] as a client in 2013 was a critical mistake and should never have happened,” Deutsche Bank’s chief executive, Christian Sewing, told staff in a memo on Tuesday.
“We all have to help ensure that this kind of thing does not happen again,” Sewing said.
In a statement, the bank also acknowledged deficiencies in its monitoring of Danske Estonia and FBME. It said the state regulator’s “factual findings on Danske Estonia and FBME, like our own internal investigation, identified various deficiencies in our oversight and monitoring of the banks that used our clearing services. There was no intentional effort by anyone within the bank to facilitate unlawful activity.”
Epstein was a financier who was convicted of soliciting sex from a minor in Florida in 2008 but maintained influential connections with high profile men including Donald Trump, Bill Clinton and Prince Andrew.
Ghislaine Maxwell, a British socialite who was Epstein’s former girlfriend and confidante, was arrested in New Hampshire last week, on charges of aiding and participating in Epstein’s abuse of underage girls. Maxwell, who has repeatedly denied any wrongdoing, is due in court in New York on Friday.