JACKSONVILLE, Fla. -- Anti-money-laundering specialists at Deutsche Bank recommended in 2016 and 2017 that multiple transactions involving legal entities controlled by Donald Trump and his son-in-law, Jared Kushner, be reported to a federal financial-crimes watchdog.
The transactions, some of which involved Trump's now-defunct foundation, set off alerts in a computer system designed to detect illicit activity, according to five current and former bank employees. Compliance staff members who then reviewed the transactions prepared so-called suspicious-activity reports that they believed should be sent to a unit of the Treasury Department that polices financial crimes.
But executives at Deutsche Bank, which has lent billions of dollars to the Trump and Kushner companies, rejected their employees' advice. The reports were never filed with the government.
The nature of the transactions was not clear. At least some of them involved money flowing back and forth with overseas entities or individuals.
Real estate developers such as Trump and Kushner sometimes do large, all-cash deals, including with people outside the United States, any of which can prompt anti-money-laundering reviews. The red flags raised by employees do not necessarily mean the transactions were improper. Banks sometimes opt not to file suspicious-activity reports if they conclude their employees' concerns are unwarranted.
But former Deutsche Bank employees said the decision not to report the transactions reflected the bank's generally lax approach to money-laundering laws for many lucrative clients, not just Trump and Kushner. Most of the employees spoke on the condition of anonymity to preserve their ability to work in the industry.
"You present them with everything, and you give them a recommendation, and nothing happens," said Tammy McFadden, a former Deutsche Bank anti-money-laundering specialist who reviewed some of the transactions. "It's the [Deutsche Bank] way. They are prone to discounting everything."
McFadden said she was terminated last year after she raised concerns about the bank's practices. Since then, she has filed complaints with the Securities and Exchange Commission and other regulators about the bank's anti-money-laundering enforcement.
Kerrie McHugh, a Deutsche Bank spokesman, said the company had intensified its efforts to combat financial crime. An effective anti-money-laundering program, she said, "requires sophisticated transaction screening technology as well as a trained group of individuals who can analyze the alerts generated by that technology both thoroughly and efficiently."
"At no time was an investigator prevented from escalating activity identified as potentially suspicious," she added. "Furthermore, the suggestion that anyone was reassigned or fired in an effort to quash concerns relating to any client is categorically false."
Amanda Miller, a spokesman for the Trump Organization, the umbrella company for the Trump family's many business interests, said: "We have no knowledge of any 'flagged' transactions with Deutsche Bank." She said the Trump Organization currently has "no operating accounts with Deutsche Bank." She did not respond when asked if other Trump entities had accounts.
Karen Zabarsky, a spokesman for Kushner Cos., said: "Any allegations regarding Deutsche Bank's relationship with Kushner Companies which involved money laundering is completely made up and totally false. The New York Times continues to create dots that just don't connect."
BANK IN A BIND
Trump has a two-decade relationship with the German bank, the only mainstream financial institution that has been consistently willing to do business with the real estate developer.
When most Wall Street banks had stopped doing business with Trump after his repeated defaults, Deutsche Bank lent Trump and his companies a total of more than $2.5 billion. Projects financed through the private-banking division include Trump's Doral golf resort near Miami and his transformation of Washington's Old Post Office Building into a luxury hotel.
When he became president, he owed Deutsche Bank well over $300 million. That made the German institution Trump's biggest creditor -- and put the bank in a bind.
Senior executives worried that if they took a tough stance with Trump's accounts -- for example, by demanding payment of a delinquent loan -- they could provoke the president's wrath. On the other hand, if they didn't do anything, the bank could be perceived as cutting a lucrative break for Trump, whose administration wields regulatory and law enforcement power over the bank.
Congressional and state authorities are investigating Trump's relationship with the bank and have demanded the bank's records related to the president, his family and their companies. Subpoenas from two House committees seek, among other things, documents related to any suspicious activities detected in Trump's personal and business bank accounts since 2010, according to a copy of a subpoena included in a federal court filing.
Trump and his family sued Deutsche Bank in April, seeking to block it from complying with the congressional subpoenas. The president's lawyers described the subpoenas as politically motivated.
Among the records being sought are those involving a series of transactions in the summer of 2016. Deutsche Bank's software flagged the transactions involving the real estate company of Kushner, now a senior White House adviser.
McFadden, a longtime anti-money-laundering specialist in Deutsche Bank's Jacksonville, Fla., office, said she had reviewed the transactions and found that money had moved from Kushner Cos. to Russian individuals. She concluded that the transactions should be reported to the government, so she drafted a suspicious-activity report and compiled a small bundle of documents to back up her decision.
Typically, such a report would be reviewed by a team of anti-money-laundering experts who are independent of the business line in which the transactions originated -- in this case, the private-banking division, according to McFadden and two former Deutsche Bank managers.
That did not happen with this report. It went to managers in New York who were part of the private bank, which caters to the ultrawealthy. They felt McFadden's concerns were unfounded and opted not to submit the report to the government, the employees said.
McFadden and some of her colleagues said they believed the report had been killed to maintain the private-banking division's strong relationship with Kushner.
McFadden said she drafted the suspicious-activity report in part because federal regulators had ordered Deutsche Bank to toughen its scrutiny of potentially illegal transactions. In the past few years, United States and European authorities have punished Deutsche Bank for laundering billions of dollars for Russians and for moving money into nations such as Iran in violation of American sanctions.
Two former employees said that they had raised concerns about transactions involving companies linked to prominent Russians, but that managers had told them not to file suspicious-activity reports. The employees were under the impression that the bank did not want to upset important clients.
Several employees said they had complained about the bank's anti-money-laundering processes to Joshua Blazer, the head of Deutsche Bank's financial crimes investigations division in Jacksonville, Fla., and had then been criticized for having a negative attitude. One employee said she resigned last summer over concerns about the bank's ethics.
Blazer, hired by Deutsche Bank in 2017 to strengthen the bank's financial crime-fighting apparatus, declined to comment.
A Section on 05/20/2019
Print Headline: Deutsche Bank flagged Trump, Kushner deals