Compliance
US Fed Slaps Deustche Bank With Hefty Fine Over FX Practices
The Fed found lapses in Deutsche Bank's oversight of, and internal controls over, foreign exchange traders who bought and sold US dollars and other currencies for the bank's own accounts and customers.
Deutsche Bank will pay more than $150 million in penalties for crooked foreign exchange practices and compliance lapses, the US Federal Reserve has said, adding to the bank's long list of legal woes.
Germany's largest lender will pay a $136.9 million fine for “unsafe and unsound” practices in foreign exchange markets, as well as a $19.7 million penalty for failing to maintain an adequate Volcker Rule compliance program prior to March 30, 2016. The Volcker Rule is a federal regulation that prohibits banks from making certain types of speculative investments that contributed to the 2008 financial tsunami.
Deutsche bank said: “We are pleased to resolve these civil enforcement matters with the Federal Reserve.”
The Fed found lapses in Deutsche Bank's oversight of, and internal controls over, foreign exchange traders who bought and sold US dollars and other currencies for the bank's own accounts and customers.
Deustche Bank failed to detect and address that its traders were using online chatrooms to communicate with competitors about their trading positions, the Fed said. As a result, the bank has been ordered to improve its senior management oversight and controls relating to its foreign exchange trading.
The Frankfurt-headquartered bank is also required to cooperate in investigations into individuals involved and is banned from re-employing or engaging with those involved.
The Fed also found “gaps” in key elements of Deutsche Bank's compliance program for the Volcker Rule. The regulation generally bans insured depository institutions and any company affiliated with them from engaging in proprietary trading. It also prevents certain relationships with hedge funds and private equity funds.
As a result, the Fed has issued a consent order, requiring the bank to enhance its oversight and controls relating to its compliance with Volcker Rule requirements.
