FRANKFURT/NEW YORK (Reuters) – The U.S. Department of Justice has in recent weeks stepped up its investigation into Deutsche Bank’s role in the 200 billion euro (171.8 billion pounds) Danske Bank money laundering scandal, four people familiar with the inquiry told Reuters.
One source said the DoJ’s new line of inquiry is whetherDeutsche (DBKGn.DE) helped move tainted money from Danske(DANSKE.CO), Denmark’s largest lender, into the United States. If proven, that could lead to steep financial penalties.
Officials from the DoJ, who have been working closely withEstonian prosecutors for around a year, have also beguncooperating with Frankfurt state prosecutors, the sources said.
The Frankfurt prosecutors have been exploring Deutsche’s role in processing payments for the Danish bank.
The DoJ’s focus on Germany’s largest bank and its work withFrankfurt prosecutors have not previously been reported.
A Danske spokesman said it continued to cooperate with theauthorities in Estonia, Denmark, France and the United States.
The DoJ and Frankfurt state prosecutors declined to commenton the U.S. investigation, which two sources told Reuters is dueto be completed next year.
Deutsche Bank’s spokesman said it had significantly improvedcontrols in recent years.
“We have repeatedly stressed that we are in a good andconstructive exchange with the authorities,” he added.
Danske’s admission last year that suspicious paymentstotalling 200 billion euros from Russia and elsewhere flowedthrough its branch in Estonia has triggered worldwide probes.
The bulk of these payments were processed by Deutsche,sources have previously told Reuters.
Although the Justice Department requested information fromDeutsche last year relating to Danske transactions, at the timeits executives believed that the investigation was focused onDanske and that the German bank itself was not a target.
However, Deutsche officials were made aware in recent monthsthat the scope of the DoJ probe had broadened to the bank’s rolein facilitating the Danske trades and its possible failure toreport suspicious transactions quickly enough, one of the peoplesaid.
Deutsche has already paid nearly $700 million (545.6 million pounds) in fines byNew York and British regulators in a separate money launderingcase involving $10 billion in so-called mirror trades fromRussia, which the DoJ is still investigating.
FOLLOWING THE MONEY
U.S. investigators have spoken to current and formerDeutsche compliance staff in the U.S. who raised concerns overpossible suspect transactions with supervisors but were ignored,two people said, adding that some involved Danske.
Estonian prosecutors are sharing their findings on Danske,hoping they will share in the proceeds in the event of U.S.fines, four people said.
One source said Estonian prosecutors are examining more thanten transactions involving up to $2 billion of suspect criminalfunds in total. Reuters could not ascertain the details of those deals.
Deutsche alerted Germany’s money laundering data authority and state prosecutors in February to more than one million suspect money transfers, two people said, five years after a whistleblower raised the alarm at Danske.
Washington and Frankfurt are now asking what led to thedelay and whether there were lapses as some of the contestedmoney transfers, which were earlier singled out by compliancestaff, are among those Deutsche later flagged, two people said. Frankfurt prosecutors have also questioned Sylvie MatheratDeutsche’s former top official in charge of anti-moneylaundering and the highest ranking of ten Deutsche bankers andexecutives they have interviewed.
Matherat, who left Deutsche this year, and the others wereinterviewed as witnesses whose first-hand knowledge is beingdrawn on to form an overall picture, the person said.
Matherat declined to comment. A Deutsche spokesman confirmedshe had been interviewed as a witness.