Deutsche Bank is under investigation by the Dubai Financial Services Authority over alleged shortcomings in its customer due diligence and anti-money-laundering procedures.
Dubai investigates Deutsche Bank over anti-money-laundering practices
Germany’s Deutsche Bank is under investigation by the DIFC’s financial regulator over alleged shortcomings in its customer due diligence and anti-money-laundering procedures.
The Dubai Financial Services Authority (DFSA) is concerned about several potential regulatory breaches by the bank’s personal wealth management division.
The investigation, which began last December, came to light yesterday after the DFSA said it had started proceedings against the bank’s Dubai branch in the DIFC Courts to compel the bank to produce documents relevant to the inquiry.
“The DFSA has brought the proceedings for the purpose of enforcing compliance with two investigative notices served on [Deutsche Bank’s DIFC branch] under Article 80 of the Regulatory Law 2004, requiring the production of information and documents,” said a statement posted on the regulator’s website yesterday.
The DFSA, which regulates financial practices within the Dubai International Financial Centre free zone, filed proceedings in the DIFC Courts on October 31. A hearing has been scheduled for January 14.
In July, the regulator presented the bank with a request for information on its personal wealth management clients, including client names, details of relationship managers, and the level of client due diligence performed by the bank.
The regulator claims that Deutsche Bank did not provide the full range of information demanded of it. The lender is claimed to have raised the issue of client confidentiality under Swiss law, given that many of its clients were registered with its Geneva branch.
Deutsche Bank is said to have yet to provide the required information after DFSA officials visited the bank’s Dubai branch in August.
The DFSA is seeking a legal injunction compelling Deutsche Bank to produce the requested information.
The case is the first that DFSA has filed in the DIFC Courts against a major western financial insitution, and the first court action it has filed in the last four years.
Deutsche Bank has declined to comment.
The DFSA’s investigation comes amid greater scrutiny of the bank’s activities in its home market.
The German newspaper Welt am Sonntag reported in August that the German regulator BaFin was investigating whether Deutsche Bank’s money laundering controls were sufficient.
According to the report, the bank did not report suspicious transactions to the police in a timely manner, provoking questions about whether the bank’s internal compliance and risk management systems were adequate.