The long and murky relationship between Jeffrey Epstein and Deutsche Bank has caught the attention of New York regulators.
Months of investigation by New York’s financial watchdog agency, the Department of Financial Services, may spur a punishment of the German lender for its decision to keep the famous sex criminal as a client years after his first conviction, according to a report.
Epstein maintained dozens of accounts at Deutsche Bank until last summer and borrowed money from the bank after pleading guilty to paying underage girls for sex in 2009. The DFS probe is focused on why Deutsche allowed employees to acquire Epstein as a client after rival bank JPMorgan Chase dumped him as a client in 2013, according to the New York Times, which first reported the news.
An enforcement action could come as soon as this month, and would be focused on the bank’s failure to comply with state regulations and its own policies and procedures, sources told Reuters on Tuesday.
The Department of Financial Services declined to comment. Deutsche Bank didn’t immediately respond to requests for comment.
“Our reputation is our most precious asset. We regret the decision to associate with Epstein,” Deutsche Bank spokesman Daniel Hunter told Reuters.
Deutsche Bank, which only cut ties with Epstein a few weeks before his suicide in a Manhattan jail cell last August, publicly launched its own investigation into its relationship with him last year.
Since 2015, Deutsche Bank has paid more than $10 billion in fines for violations ranging from its role in the 2008 mortgage crisis to Russian money laundering. The bank has also come under regulatory pressure to disclose the details of its relationship with President Trump.
Any action taken by the DFS would be a serious headache for Deutsche CEO Christian Sewing, who took the reins of the bank just over two years ago and has largely managed to steer the $19 billion financial services entity back to safety after massive cutbacks and tighter risk management.
The investigation might also serve as a gold mine of clues in the larger mystery of what kind of business Epstein was actually engaged in and with whom he was doing business.
During his life, Epstein was purported to be an investor for ultra-wealthy clients. But while some famous names like Leon Black and Leslie Wexner have emerged as clients of the dead sex criminal, no one on Wall Street seems to have ever taken investment from Epstein or his opaque shell, Southern Trust Company.