Deutsche Bank to invest more to prevent money laundering

Monday, 5 October 2015 00:00 - - {{hitsCtrl.values.hits}}

FRANKFURT (Reuters): Deutsche Bank plans to invest more in technology to prevent money laundering, according to the head of the division that processes its transactions.

Germany’s biggest bank was hit by a scandal over suspected money laundering at its Moscow office over the summer and last month said it was closing part of its business in Russia as part of a review of its global structure.

It has also yet to settle with US authorities over alleged sanctions-related violations, following investigations of peers like Commerzbank and Societe Generale for moving funds through the US financial system for countries such as Iran and Sudan. Werner Steinmueller, head of Deutsche Bank’s Global Transaction Banking (GTB) business, told Reuters the lender planned to increase spending on systems to prevent money laundering.

He did not give any figures for this investment, but said it was part of the bank’s plans to gradually double its annual investment of 100 million euros ($113 million) in the GTB division.

“The regulatory requirements are rising, that is a big challenge for all banks,” he said on Friday.

Computer systems can be relatively easily programmed to comply with sanctions against countries, companies or individuals, Steinmueller said.

“It gets much tougher when it comes to fraud,” he added. “Known con schemes can be identified fairly quickly but new scams across countries and currencies are much more difficult.” Steinmueller said banks used algorithms to spot suspicious trades, but added that Deutsche Bank’s GTB unit handles 200,000 to 300,000 transactions every day.

“You are looking for a needle in a haystack,” he said.

Germany’s flagship lender has maintained its global transaction banking network and benefited from the retreat of peers from several markets, Steinmueller said. “A big network is essential in for payment systems and trade financing and that’s why Deutsche Bank will stay active in transaction banking in Russia even though it is reducing its footprint in the country,” he said.

The GTB unit is expected to avoid much of the cost and job cutting expected in retail and investment banking, sources have said. Chief Executive John Cryan is due to unveil details of his planned revamp later this month. “If we grow as expected in foreign trade finance we will need more staff,” Steinmueller said.

The division also expects to see continued growth in China, although growth rates are expected to ease over the next 8-12 months in the wake of recent financial market turbulence there.

“We have become more cautious on hiring in China. We continue to recruit but are more selective than in the past.”