Anti-money laundering specialists at Deutsche Bank told The New York Times that multiple transactions by entities controlled by President Donald Trump and his son-in-law, Jared Kushner, were flagged as suspicious in 2016 and 2017, but the bank chose not to file reports with the Treasury Department.
Citing five former and current bank employees, the Times said the transactions triggered a computer system designed to detect potentially problematic activity, and then were reviewed by compliance specialists. However, bank managers decided not to further pursue oversight.
The red flags alone do not necessarily mean the transactions were improper. But the overall tone of the Times’ story points toward sufficient smoke to warrant further investigations into whether or not there was fire. For years, Trump had been one of Deutsche Bank’s biggest clients, and Deutsche Bank was one of the only banks willing to lend money to Trump and his business empire when many of his ventures had gone bankrupt or were drowning in debt.
Beginning in about 1998, Deutsche Bank granted loans to the Trump Organization totaling a staggering $2.5 billion. During Trump’s presidential candidacy, entities affiliated with Trump had more than $300 million in borrowings from the bank.
A recent New York Times investigation of Trump’s taxes found that Trump was so bad at business, however, that he managed to accumulate $1.17 billion in losses from 1985 to 1994, based on Internal Revenue Service tax transcripts.
Yet less than a decade before Trump launched his presidential campaign, the Trump Organization somehow spent more than $400 million in cash on real estate deals. That marked a striking shift in Trump’s previous business strategy of heavily relying on debt to do business. And in 2008, Donald Trump Jr. notoriously bragged that, “Russians make up a pretty disproportionate cross section of a lot of our assets.”
Deutsche Bank also faces “significant disciplinary action” for its role in a $20 billion Russian money-laundering scheme, The Guardian reported last month. According to the newspaper, “Russian criminals with links to the Kremlin, the old KGB and its main successor, the FSB, used the scheme between 2010 and 2014 to move money into the western financial system.”
While we don’t yet know if these developments are related, we do know that Democratic lawmakers want to get to the bottom of Trump’s relationship with the bank. The House Financial Services and Intelligence Committees issued subpoenas to Deutsche Bank and Capital One seeking Trump’s financial records. In response, Trump and members of his family sued Deutsche Bank and Capital One late last month in an effort to block the subpoenas. Trump clearly doesn’t want that information made public or scrutinized by lawmakers.
“As a private businessman, Trump routinely used his well-known litigiousness and the threat of lawsuits to intimidate others, but he will find that Congress will not be deterred from carrying out its constitutional responsibilities,” House Financial Services Chair Maxine Waters and House Intelligence Chair Adam Schiff said in a joint statement reported by Politico after the Trump family filed the lawsuit.
New York Attorney General Letitia James also issued subpoenas to Deutsche Bank regarding its financing of Trump projects.
In its latest report, the Times noted:
…[F]ormer Deutsche Bank employees said the decision not to report the Trump and Kushner transactions reflected the bank’s generally lax approach to money laundering laws. The employees — most of whom spoke on the condition of anonymity to preserve their ability to work in the industry — said it was part of a pattern of the bank’s executives rejecting valid reports to protect relationships with lucrative clients.
“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 D.B. way. They are prone to discounting everything.”
McFadden said she was recently fired by Deutsche Bank after raising concerns about the bank’s oversight practices. A spokeswoman for Deutsche Bank called McFadden’s claim “categorically false.”
A spokeswoman for Kushner Companies, Karen Zabarsky, told the Times: “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.”
Eventually, the public will find out if those dots connect or not.