July 7 (UPI) -- New York regulators announced Tuesday a $150 million penalty on Deutsche Bank tied to suspicious transactions involving Jeffrey Epstein and two foreign banks, Danske Estonia and FBME Bank.
Deutsche Bank has agreed to pay $150 million as a result of "significant compliance failures," Linda Lacewell, superintendent of the New York State Department of Financial Services, said in a statement. These failures were related to its banking relationships with Epstein and the two foreign banks.
The statement said the settlement marks the first enforcement action by a regulator against a financial institution for dealings with registered sex offender, accused child sex trafficker and financier Epstein, who died last year, at age 66, by hanging himself in a jail cell.
"Banks are the first line of defense with respect to preventing the facilitation of crime through the financial system, and it is fundamental that banks tailor the monitoring of their customers' activity based upon the types of risk that are posed by a particular customer," Lacewell said in the statement. "In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the Bank itself deemed to be high risk. In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein's terrible criminal history, the bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions."
Among the suspicious dealings involving Epstein, which regulators listed, were over $6 million in payments for legal expenses of alleged co-conspirators in sexually abusing young women, payments to Russian models, women's school's tuition, hotel and rent expenses, and suspicious cash withdrawals of more than $800,000 over approximately four years.
In regard to Dankse Estonia, it was "at the center of one of the world's largest money laundering scandals," the statement said.
Still, Deutsche Bank failed to stop Danske Estonia from "transferring billions of dollars of suspicious transactions through Deutsche Bank accounts in New York," it said.
FBME similarly failed to respond to "red flags," the statement added, with the consent order showing that it has had 826 suspicious transactions since 2008.