Anti-money laundering specialists at Deutsche Bank recommended in 2016 and 2017 that multiple transactions involving legal entities controlled by Donald Trump and his son-in-law, Jared Kushner, be reported to a federal financial-crimes watchdog.

The transactions, some of which involved Trump’s now-defunct foundation, set off alerts in a computer system designed to detect illicit activity, according to five current and former bank employees.

Compliance staff members who then reviewed the transactions prepared so-called suspicious activity reports that they believed should be sent to a unit of the Treasury Department that polices financial crimes.

But executives at Deutsche Bank, which has lent billions of dollars to the Trump and Kushner companies, rejected their employees’ advice.

The reports were never filed with the government.

The nature of the transactions was not clear.

At least some of them involved money flowing back and forth with overseas entities or individuals, which bank employees considered suspicious.

Real estate developers like Trump and Kushner sometimes do large, all-cash deals, including with people outside the United States, any of which can prompt anti-money laundering reviews.

But former Deutsche Bank employees said the decision not to report the Trump and Kushner transactions reflected the bank’s generally lax approach to money laundering laws.

The employees — most of whom spoke to The New York Times on the condition of anonymity to preserve their ability to work in the industry — said it was part of a pattern of the bank’s executives rejecting valid reports to protect relationships with lucrative clients.

“You present them with everything, and you give them a recommendation, and nothing happens,” said Tammy McFadden, a former Deutsche Bank anti-money laundering specialist who reviewed some of the transactions. “It’s the D.B. way. They are prone to discounting everything.”

McFadden said she was terminated last year after she raised concerns about the bank’s practices.

Kerrie McHugh, a Deutsche Bank spokeswoman, said the company had intensified its efforts to combat financial crime.

An effective anti-money laundering program, she said, “requires sophisticated transaction screening technology as well as a trained group of individuals who can analyze the alerts generated by that technology both thoroughly and efficiently.”

“At no time was an investigator prevented from escalating activity identified as potentially suspicious,” she added. “Furthermore, the suggestion that anyone was reassigned or fired in an effort to quash concerns relating to any client is categorically false.”

McFadden said that wasn’t true, and has filed complaints with the Securities and Exchange Commission and other regulators about the bank’s anti-money-laundering enforcement.

Deutsche Bank’s decision not to report the transactions is the latest twist in Trump’s long, complicated relationship with the German bank — the only mainstream financial institution consistently willing to do business with the real estate developer.

Congressional and state authorities are investigating that relationship and have demanded the bank’s records related to the president, his family and their companies.

Subpoenas from two House committees seek, among other things, documents related to any suspicious activities detected in Trump’s personal and business bank accounts since 2010, according to a copy of a subpoena included in a federal court filing.

Trump and his family sued Deutsche Bank in April, seeking to block it from complying with the congressional subpoenas.

In the summer of 2016, Deutsche Bank’s software flagged a series of transactions involving the real estate company of Kushner, now a senior White House adviser.

McFadden, a longtime anti-money laundering specialist in Deutsche Bank’s Jacksonville office, said she had reviewed the transactions and found that money had moved from Kushner Companies to Russian individuals.

She concluded that the transactions should be reported to the government — in part because federal regulators had ordered Deutsche Bank, which had been caught laundering billions of dollars for Russians, to toughen its scrutiny of potentially illegal transactions.

McFadden drafted a suspicious activity report and compiled a small bundle of documents to back up her decision.

Typically, such a report would be reviewed by a team of anti-money laundering experts who are independent of the business line in which the transactions originated — in this case, the private-banking division — according to McFadden and two former Deutsche Bank managers.

That did not happen with this report.

It went to managers in New York who were part of the private bank, which caters to the ultrawealthy.

They felt McFadden’s concerns were unfounded and opted not to submit the report to the government, the employees said.

McFadden and some of her colleagues said they believed the report had been killed to maintain the private-banking division’s strong relationship with Kushner.

After Trump became president, transactions involving him and his companies were reviewed by an anti-financial crime team at the bank called the Special Investigations Unit.

That team, based in Jacksonville, produced multiple suspicious activity reports involving different entities that Trump owned or controlled, according to three former Deutsche Bank employees who saw the reports in an internal computer system.

Some of those reports involved Trump’s limited liability companies.

At least one was related to transactions involving the Donald J. Trump Foundation, two employees said.

Deutsche Bank ultimately chose not to file those suspicious activity reports with the Treasury Department, either, according to three former employees.

They said it was unusual for the bank to reject a series of reports involving the same high-profile client.

Trump’s relationship with Deutsche Bank spans two decades.

During a period when most Wall Street banks had stopped doing business with him after his repeated defaults, Deutsche Bank lent Trump and his companies a total of more than $2.5 billion.

Projects financed through the private-banking division include Trump’s Doral golf resort near Miami and his transformation of Washington’s Old Post Office Building into a luxury hotel.

When he became president, he owed Deutsche Bank well over $300 million.

That made the German institution Trump’s biggest creditor.

 

Attribution:The New York Times
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