A group of Democratic senators want top officials at the Federal Reserve to examine whether Deutsche Bank complied with anti-money-laundering and other laws after bank employees flagged transactions tied to President Trump as potentially suspicious.

The request, in a letter sent Thursday, was in response to a New York Times report about specialists at Deutsche Bank recommending that transactions by legal entities controlled by Mr. Trump and his son-in-law, Jared Kushner, be reported to a federal financial-crime regulator. Managers at the bank rejected their employees’ advice and did not alert the government.

The letter to the Fed chairman, Jerome H. Powell, and John C. Williams, the president of the Federal Reserve Bank of New York, called on the Fed to look into the transactions and whether the bank’s handling of the matter adhered to anti-money-laundering laws. The Fed is one of the main regulators of Deutsche Bank’s American operations.

“Only by conducting a thorough review of the full range of this activity can we better understand what happened in these cases; what practices, procedures, or personnel may need to be changed at the bank; and what regulators should do to ensure the Federal Reserve’s ability effectively to monitor compliance with anti-money laundering laws,” the senators wrote.

Employees in Deutsche Bank’s Jacksonville, Fla., office flagged the transactions in 2016 and 2017 — during the presidential campaign and Mr. Trump’s first year in office. The German lender was the only mainstream financial institution consistently willing to do business with Mr. Trump over the past two decades because of his repeated defaults.

The employees said the handling of the Trump and Kushner transactions was part of a pattern of the bank’s executives rejecting valid reports to protect relationships with lucrative clients. The bank had disputed that view.

The letter, sent by Senator Chris Van Hollen, Democrat of Maryland, also asks the Fed officials for information about their interactions with Deutsche Bank, including whether they have investigated the issues that several former bank employees raised in the Times article. In addition to Mr. Van Hollen, the letter was signed by six other Senate Democrats, including Elizabeth Warren of Massachusetts, who is running for president, and Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee.

“This is a test of the Fed’s independence,” Mr. Van Hollen said in an interview. “It would be gross negligence if they weren’t investigating.”

Representatives of the Fed and Deutsche Bank declined to comment. The bank has previously said it was cooperating with various government investigators.

Deutsche Bank has a history of run-ins with the Fed. Since the early 2000s, regulators at the central bank have repeatedly criticized Deutsche Bank for a range of problems, including inadequate risk management and sloppy financial accounting. Most recently, in May 2017, the Fed ordered Deutsche Bank to fix anti-money-laundering systems that had failed to stop billions of dollars of illicit transactions by wealthy Russians.

Congress has turned a close eye to the bank’s longstanding relationship with Mr. Trump and his family. Deutsche Bank has dispensed a total of about $2.5 billion in loans to Mr. Trump’s companies, and more than $300 million was outstanding when he was sworn in as president, making it by far his largest creditor.

Deutsche Bank “was very good and highly professional to deal with — and if for any reason I didn’t like them, I would have gone elsewhere,” Mr. Trump wrote on Twitter last month.

In the House of Representatives, the Financial Services and Intelligence Committees have issued subpoenas to Deutsche Bank, demanding its records about the Trump family. Among other things, the subpoenas seek information about any “suspicious activity reports” that the bank prepared in connection with Mr. Trump’s accounts.

Mr. Trump has sued to block Deutsche Bank and another bank, Capital One, from complying with the congressional subpoenas. A federal judge ruled against Mr. Trump last month. The case will most likely be heard by an appeals court this summer.

In the meantime, congressional investigators are preparing to interview former Deutsche Bank employees, including some who have voiced concerns about the bank’s anti-money-laundering practices.

Source: Read Full Article