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Mnuchin to Review Deutsche Bank's Suspicious Activity Reporting

Jesse Hamilton
Mnuchin to Review Deutsche Bank's Suspicious Activity Reporting

(Bloomberg) -- Treasury Secretary Steven Mnuchin pledged to examine whether Deutsche Bank AG is appropriately alerting regulators to suspicious financial activity following a recent media report that said the bank declined to flag transactions involving President Donald Trump’s businesses.

Mnuchin told House lawmakers Wednesday that he’s going to direct the Treasury unit that polices money laundering, the Financial Crimes Enforcement Network, to ensure Deutsche Bank is following the rules for filing suspicious activity reports, also known as SARS.

Read More: Deutsche Bank Software for Catching Money Laundering Had Defect

He made the comment in response to a question about a May 19 New York Times article that said the Frankfurt-based bank -- a longtime lender to Trump and his real estate empire -- chose not to report some transactions in 2016 and 2017 that employees considered suspicious.

“I’m going to have FinCEN follow up and make sure that Deutsche Bank -- like anyone else -- has SARS policies that are on everyone,” Mnuchin said at a House Financial Services Committee hearing, acknowledging that he’d read the news report. “I am not aware whether this is true or not true, but I will have FinCEN follow up.”

Tripping Alarms

Suspicious-activity reports are meant to inform federal watchdogs of large transactions that trip certain alarms. Still, big banks file the documents all the time in vast numbers, and they don’t necessarily mean the transactions violated any laws.

Mnuchin promised he’d report back to Congress with the results of Treasury’s compliance review with Deutsche Bank. Deutsche Bank has disputed that workers were prevented from flagging suspicious activity.

At the hearing Wednesday, Mnuchin also said he hasn’t always been impressed with Deutsche Bank’s business decisions. When pressed by Representative Katie Porter, a California Democrat, about billions of dollars in losses reported by the troubled German lender, he was surprisingly candid.

“I can tell you I’m familiar with some of their really bad investments and I find it hard to believe that they made them,” said Mnuchin, who had a long career in finance before becoming Treasury secretary in 2017.

To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net

To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory Mott

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