ithin two weeks of joining JPMorgan’s blockchain-based payments initiative, the Interbank Information Network (IIN), Deutsche Bank, has been raided by German authorities over the Danske scandal. Deutsche bank is the largest banking institution in Germany.
The bank’s Frankfurt headquarters were raided in search of info related to the Danske Bank and a money laundering scandal, according to Frankfurt prosecutors. The scandal has taken a turn as the former head of the Danske Bank in Estonia was found dead after disappearing on Monday.
Other countries are also investigating the Danske Bank, including Denmark, Estonia, the United States, and the United Kingdom over suspicious payments that total around 200 billion Euros that moved through its tiny Estonian Branch. Deutsche Bank acted as a correspondent bank for Danske.
Deutsche Bank has been co-operative with the investigation thus far, “Deutsche Bank has comprehensively examined the facts of the matter and has voluntarily provided the requested documents as far as possible,” said the bank in a statement.
Prosecutors said Deutsche Bank had alerted authorities to 1.1 million suspicious transactions, and that a double-digit number of transactions, with a volume of 12.5 million Euros, were either registered by Deutsche too late with authorities, or the bank should have blocked them.
Prosecutors said there was a suspect that worked at the bank during a period of time between 2014 to 2018. This isn’t the first time the bank has been raided or has had legal scrutiny.
Last year, the bank was raided by police in six different bank offices in and around Frankfurt over more money laundering allegations that were linked to the previous sensational, “Panama Papers”
In 2017, the bank was fined $630 million for artificial trades between Moscow, London, and New York City. The U.S. Department of Justice believes that the trades could have been used for money laundering and that investigation is still ongoing.
BaFin, the financial market watchdog of Germany ordered the bank last year to do more to prevent money laundering.
The Interbank Information Network (IIN) brings efficiencies by writing all the data on payments a shared ledger, thus allowing problematic payments to be resolved more quickly and with less manual processes, said Deutsche Bank’s global head of cash management, Ole Matthiessen.
Cryptocurrency has always been in the hotseat for its uses in laundering by less that reputable people and the moral use of cryptocurrencies has always been debatable. Financial institutions, even today, struggle to monitor the thousands if not millions of transactions that happen daily. Crypto makes transaction data viewable to the public, where virtually all banks do not allow this.
It is important to remember that if the transactions were done with cryptocurrency, there may not be anyway to know who the parties of the transaction are, and thus anything could be done with the money. In our society today, financial strength is political strength.
Do we prioritize privacy and risk the nefarious uses of bad actors? Do we risk making mainstream a system that aids nefarious actors to launder funds? Many questions like these will need to be answered by banks like JPMorgan and Deutsche Bank sooner than later.