As a measure to prevent money laundering and terrorist financing in the wake of the furore over Danske Bank's branch in Estonia, for which Deutsche Bank acted as a correspondent bank, Germany's all-in-one financial regulator has ordered Deutsche to review its group-wide risk management processes in the area of correspondent banking and adjust them if needs be.

BaFin issued its order in accordance with s51(2) sentence 1 Money Laundering Act (the Geldwäschegesetz or GwG). In order to monitor the implementation of this measure, BaFin has expanded the mandate of KPMG, the 'special representative' (the German version of a British 'skilled person') which it appointed last year in an official notice dated 21 September 2018 in accordance with s45c(1) in conjunction with subs(2) no 6 Banking Act (the Kreditwesengesetz or KWG). KPMG is to report on and assess the progress of the implementation.

KPMG was already acting as a senior representative, with Deutsche paying its fees, with a brief to inspect the bank's KYC or "know your customer" controls. The bank has had subpoenas from other regulators in the world. It declined to tell Compliance Matters which American regulators, if any, had approached the bank for information and/or remediation.

The bank has been cutting its correspondent business down drastically in the last two years. It has already been in trouble with overseas regulators in the past few years; the US Federal Reserve fined its American operations US$41 million for bad anti-money laundering controls.

The European Union has interested itself in Deutsche Bank's part in the Danske Bank débâcle also. Stephan Wilken, the bank’s Group Anti-Money-Laundering Officer, and Dr Jens Fürhoff, the head of money-laundering prevention at BaFin, testified recently in front of a committee of the European Parliament. Sven Giegold of Bündnis 90/Die Grünen (Alliance 90/The Greens), berated them both for their secretiveness.

"Deutsche Bank refuses to provide information. It refused more persistently than any other bank in the European Parliament to make concrete statements on individual cases of money laundering. Wilken...could not or would not name how many employees had to resign because of involvement in financial crime. He says only vaguely that there were very few of them. The hearing was a missed opportunity to regain public trust.

"The appearance of BaFin was [a] poor show. BaFin failed to explain why it was unable to uncover the major money laundering scandals of recent years."

Deutsche Bank is expected to receive the regulatory go-ahead for a merger with Commerzbank shortly.