NEW YORK -- When Deutsche Bank AG sought out Jeffrey Epstein as a client, he was a convicted Florida sex offender with a publicized taste for young women from Eastern Europe.
The bank helped him send millions of dollars to his alleged co-conspirators. It handled transfers to women with Russian bank accounts. And it didn't fuss when the financier's personal lawyer asked how much cash he could withdraw without drawing attention -- after which the lawyer showed up scores of times to collect the maximum, $7,500 per trip.
With these and other efforts to keep the late financier's money flowing over a half-decade beginning in 2013, Deutsche Bank ignored the possibility that the financier was using the money to support a continuation of his criminal activity, New York's financial regulator said Tuesday. In addition to ignoring warning signs on Epstein, the Department of Financial Services said the bank failed to properly oversee its correspondent banking relationships with two institutions deeply embroiled in global money laundering scandals, FBME Bank Ltd. and Danske Bank A/S.
"Deutsche Bank failed to adequately monitor the activity of customers that the bank itself deemed to be high risk," DFS Superintendent Linda Lacewell said in a written statement. "In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein's terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions."
Epstein's victims may be emboldened by the DFS's action in their efforts to seek accountability and compensation from his estate. Deutsche Bank, which was fined $150 million, signed off on a consent order outlining details of the compliance lapses. The victims also could be looking for new information to arise from the arrest last week of Ghislaine Maxwell, a longtime Epstein associate who is accused of recruiting minors who were then sexually assaulted.
Deutsche Bank said it deeply regrets its association with Epstein and said it had cooperated with U.S. authorities. "We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes, and have learnt from our mistakes and shortcomings," said Daniel Hunter, a spokesman for the bank. He added that the bank had spent almost $1 billion to improve its anti-money-laundering controls.
According to the consent order, after Epstein's relationship manager at one major bank moved to Deutsche Bank in late 2012, the manager encouraged top executives at Deutsche Bank's wealth management Americas unit to recruit Epstein as a client. The relationship manager promised that Epstein could generate as much as $100 million to $300 million in "flow," as well as $2 million to $4 million in annual revenue over time.
The regulator didn't identify Epstein's previous bank. He was a longtime client of JPMorgan Chase & Co.'s private bank, which severed the relationship around that time, after Epstein's Florida conviction. JPMorgan declined to comment.
Although a client coordinator at the bank laid out Epstein's criminal history in a memo, bank executives, including some working in compliance, signed off on adding him as a client. They allowed him to shield his identity by keeping his funds in a variety of entities that didn't bear his name.
Soon after moving his funds to Deutsche Bank, Epstein began sending out payments of more than $10,000 to individuals who had been identified in news accounts as his co-conspirators. Many of the payments came out of an entity created by Epstein called the "Butterfly Trust."