FED Presumably to Fine Deutsche Bank over the Bank’s Failure to Maintain Compliance

The Federal Reserve (FED) had a private talk with Deutsche Bank recently, warning a presumable fine over the bank's failure to maintain compliance with U.S regulators, and in particular the flaws in its anti-money-laundering controls, according to sources familiar with the matter.

The potential fine ticket traces back to years ago, when the scandal-ridden bank has been classified by FED as being in "troubled condition" for its U.S operations, one of the lowest classifications.

Bickering is no stranger over the years between the bank and FED, including a $137 million settlement over allegations that traders rigged currency benchmarks and a $41 million penalty for its anti-money-laundering practices in 2017, and last July, a $150 million fine from New York's Department of Financial Services in part due to its dealings with convicted sex offender and financier Jeffery Epstein.

There are signs, however, that the bank has improved its risk management. It emerged from the March collapse of Archegos Capital Management unscathed, while other banks that did business with Bill Hwang lost more than $10 billion combined.

In addition, Deutsche Bank reported its most profitable quarter since 2014 in the first quarter this year, largely driven by its investment banking unit.