Deutsche Bank has once again come under the international spotlight as part of a yearslong money laundering investigation that involved major commercial real estate companies.
German public prosecutors raided the bank's Frankfurt headquarters on Thursday, the Washington Post reports. Around 170 people conducted the search and seizure of business documents reportedly connected to at least two unnamed employees at Deutsche Bank.
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“After an evaluation of the so-called Offshore Leaks and Panama Papers, the suspicion arose that Deutsche Bank AG was helping clients set up so-called offshore companies in tax havens and that money connected to crimes was transferred to the accounts of Deutsche Bank AG,” Frankfurt public prosecutor’s office spokesperson Nadja Niesen said in a statement.
Leaked in 2016, the Panama Papers revealed the identities of hundreds of individuals who had stashed wealth in offshore bank accounts or shell companies to avoid paying taxes in their home country. The following year, the Paradise Papers, also known as the Offshore Leaks, revealed even more individuals as well as commercial real estate companies like Colony NorthStar and Blackstone who had stashed money overseas.
A Deutsche Bank subsidiary in the British Virgin Islands is under particular scrutiny in the prosecutor's investigation, the New York Times reports. Deutsche Bank released statements on Twitter that it is "cooperating fully" with the investigation.
Deutsche Bank has been embroiled in controversy on a fairly consistent basis for the past three years, going back to its $7B settlement with the U.S. government over fraudulent mortgage practices. Last year, it had to pay $425M in fines for assisting Russian oligarchs in laundering $10B out of that country, which threw its occasional clients Kushner Cos. and The Trump Organization into more controversy.
As a result of both the penalties for its wrongdoings and the negative publicity associated with it, the past three years have been tough for Deutsche Bank's bottom line. From 2015 to 2017, it lost money every year, according to the Post, and the Times reports that shares of the company's stock have lost half of their value since the start of this year. It also failed a "stress test" by the Federal Reserve that found it is not safely guarded against a downturn.
With the hiring of a new CEO in April, Deutsche Bank indicated that it was scaling back its investment banking arm, which was the source of much of its controversy, according to the Times.
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