Deutsche Bank Searched in Money-Laundering Probe -- 4th Update

By Jenny Strasburg in London and Ulrike Dauer and Patricia Kowsmann in Frankfurt

German authorities raided Deutsche Bank AG offices Thursday as part of an investigation into whether the firm helped clients launder money through tax havens. One of the employees suspected of involvement works in the division responsible for fighting financial crime, according to people familiar with the matter.

Around 170 police officers and other officials seized documents during searches through six different properties Thursday, including one employee's home, according to authorities.

The raid was a visible sign of mounting legal problems for the German lender, which has faced a string of allegations and costly legal settlements tied to failures to prevent money laundering and other banking violations.

Thursday morning, police vehicles lined up outside Deutsche Bank's central Frankfurt headquarters, and German federal police and other officers crowded into the lobby of the high-rise towers. Officers soon filtered upstairs onto other floors of the bank to search records, a person inside the bank said.

Not long after, Randal Quarles, the Fed's vice chairman for supervision, arrived for a prescheduled lunchtime meeting with Deutsche Bank's chief executive Christian Sewing and regulatory chief Sylvie Matherat, people familiar with the matter said.

A Fed spokesman said Mr. Quarles was in Frankfurt on official Fed business, and neither the business nor the meeting with Deutsche Bank was related to the raid.

The meeting was arranged well before Thursday, the people said. Mr. Sewing became CEO in April and before Thursday had spoken with Mr. Quarles by telephone, people close to the bank say.

Ms. Matherat oversees the division responsible for detecting and preventing financial crime by clients of the bank. She has come under pressure amid discussions of a potential management shake-up, The Wall Street Journal reported this week, citing people close to the bank.

The German authorities are expected to return to Deutsche Bank Friday, according to people close to the bank. Areas they searched Thursday included management-board offices, one of the people said.

The probe includes two unidentified Deutsche Bank employees aged 50 and 46 and other unidentified employees suspected of helping clients create offshore entities in tax havens, the prosecutor's office said in a statement. The person who works in the financial crime-fighting division remained an employee Thursday, the people familiar with the matter said.

Deutsche Bank confirmed the investigation. Both the bank and prosecutors said it is related to the Panama Papers, a trove of records revealed by a consortium of journalists in 2016 tied to a Panamanian law firm that specialized in offshore holding companies.

"As far as we are concerned, we have already provided the authorities with all the relevant information regarding Panama Papers," Deutsche Bank said. It said that the bank would cooperate closely in this latest probe "as it is in our interest as well to clarify the facts."

The investigation focuses on transactions spanning 2013 to 2018, prosecutors said.

People close to the bank said its lawyers and executives aren't certain of the full scope of the investigation, including whether it is solely focused on the Panama Papers case, or could extend more broadly.

Deutsche Bank shares ended trading in Frankfurt down 3.4%.

Reports stemming from the Panama Papers linked government and other public figures and company executives around the world to overseas assets in tax havens ranging from the British Virgin Islands to Panama. The records showed hundreds of millions of dollars in assets allegedly tied to hundreds of individuals.

Officials suspect that funds from criminal activities were transferred to Deutsche Bank entities or accounts without the bank raising flags as required, the prosecutor's office said. The German prosecutors said Friday they were working based on information from Panama Papers documents and investigations.

--Ryan Tracy contributed to this article.

Write to Jenny Strasburg at jenny.strasburg@wsj.com, Ulrike Dauer at ulrike.dauer@wsj.com and Patricia Kowsmann at patricia.kowsmann@wsj.com

(END) Dow Jones Newswires

November 29, 2018 20:09 ET (01:09 GMT)

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