FRANKFURT (Reuters) – The U.S. Federal Reserve is investigating Deutsche Bank’s <DBKGn.DE> role in a money laundering scheme that has embroiled both it and Denmark’s Danske Bank <DANSKE.CO>, Bloomberg reported on Wednesday.
The Fed’s investigation is at an early stage, Bloomberg said, citing unnamed people familiar with the matter.
The U.S. central bank is investigating whether Deutsche Bank in New York properly monitored the transfer of funds it performed on behalf of Danske from its Estonia branch, the report added.
Deutsche shares were down 1.8 percent in early trade lagging Germany’s DAX index <.GDAXI> which was off 0.6 percent.
Deutsche Bank declined to comment. Deutsche Chief Executive Officer Christian Sewing said last week that the bank was investigating the Danske case internally and that it had no indications of any misconduct on the bank’s part.
Deutsche Bank has been cooperating with the Fed, Bloomberg reported.
Danske is under investigation for suspicious payments totalling 200 billion euros (£175.5 billion) from 2007 until 2015 and a source with direct knowledge of the case has told Reuters Deutsche Bank helped to process the bulk of the payments.
A Deutsche Bank executive director has said the lender played only a secondary role as a so-called correspondent bank to Danske Bank, limiting what it needed to know about the people behind the transactions.
In 2017, the Fed was among regulators that fined Deutsche Bank nearly $700 million for weak controls that allowed money laundering from Russia. A U.S. Department of Justice into the case is still ongoing.
Last November, Germany’s largest bank was the subject of another money laundering allegation. Police searched the offices of all the members of Deutsche Bank’s board as part of a two-day raid and investigation into money laundering allegations linked to the Panama Papers.
Deutsche Bank has also said that it had no indications of misconduct in this case.
In September, German regulator BaFin ordered Deutsche Bank to do more to prevent money laundering and “terrorist financing” and appointed accounting firm KPMG as a third party to assess progress.
(Reporting by Tom Sims and Andreas Framke; editing by Jason Neely)