We have a follow-up to last week’s news about Deutsche Bank and its many compliance failures that allowed convicted sex trafficker Jeffrey Epstein to remain a client for years: the New York Times has identified several executives, including one of the bank’s senior compliance officers, involved in those decisions.

New York banking regulators hit Deutsche Bank on July 7 with $150 million in penalties for poor oversight that allowed Epstein to conduct hundreds of suspicious financial transactions while he was a customer from 2013 to 2018. The consent order against the bank is 38 pages of blunders that will make a compliance officer scream: careless onboarding, negligent monitoring, sloppy record-keeping, poor communication.

The only detail missing: the names of those Deutsche Bank executives responsible for the bank’s relationship with Epstein. Well, no longer. 

Earlier this week Times columnist James Stewart wrote an article naming five executives who played a role in the misconduct. Among them: Jan Ford, Deutsche Bank’s head of compliance for the Americas. She is still in that role at Deutsche Bank today.

Let’s begin at the beginning, which was April 2013. That was when one of Deutsche Bank’s relationship managers, who had previously worked with Epstein at J.P. Morgan, approached his bosses and suggested wooing Epstein as a Deutsche Bank client. 

Well, now we can say that relationship manager is a man named Paul Morris. Morris either knew, or should have known, that Epstein had been convicted in 2008 of sex trafficking charges. 

While Morris was helping to onboard Epstein as a client, he sent an email to Deutsche Bank’s head of wealth management for the Americas. That email contained a memo recapping Epstein’s conviction and other questionable legal settlements — but in the email, Morris also cheered the several hundred million dollars in assets that Epstein would bring to Deutsche Bank, resulting in $2 million to $4 million in bank fees annually. 

That head of wealth management, identified as EXECUTIVE-1 in the consent order, is a man named Charles Packard

Packard eventually told Morris that he had consulted with other higher-ups at Deutsche Bank, including the bank’s head of AML compliance for the Americas. To be clear, that head of AML compliance was not Ford. We don’t know who that head of AML compliance was, although the person has since left Deutsche Bank. (If any of you know who this person is, [email protected] is always available for anonymous tips.)

Anyway, Packard told Morris that senior compliance and legal executives had considered Epstein’s background, “and we can move ahead so long as nothing further is identified through KYC and AML client adoptions.” 

Do we know for sure that Packard cleared Epstein through Deutsche Bank’s top compliance brass? Nope. Deutsche Bank has no other record of this conversation, beyond Packard’s reply to Morris. 

And that’s how Epstein, a known pimp and pervert, became a Deutsche Bank client. 

The Second Epstein Failure

Now skip to January 2015. By then, more of Epstein’s misconduct had come to light and Deutsche Bank executives decided to take a fresh look at Epstein, his transactions, and the bank’s relationship with him. 

One fateful date was Jan. 22, 2015. That’s when Packard and Morris visited Epstein at his mansion on the Upper East Side. They asked him about the fresh revelations of his misconduct, and Packard “appeared to be satisfied by Mr. Epstein’s response,” as the consent order diplomatically phrased it. Again, however — no contemporaneous notes or records of the meeting were kept. 

Ford

Now we get back to Ford, head of compliance for the Americas. Deutsche Bank convened a meeting of its Americas Reputation Risk Committee on Jan. 30, 2015 to review Epstein’s status and decide what to do with him. Ford was a member of that committee, along with Michael Chepiga, acting general counsel for the Americas, and Stuart Clarke, chief operating officer for the Americas (who chaired the committee). 

First, according to bank policy, the committee was supposed to keep detailed minutes of its meetings. The committee failed to do so for this meeting about Epstein. Instead, one member of the committee (we don’t know which one) emailed Packard to say they were “comfortable with things continuing” with Mr. Epstein, and that another member of the committee had “noted a number of sizable deals recently.”

So, we have a deviation from bank policy, from a committee that counted a senior compliance officer (Ford) and a senior legal officer (Chepiga) among its members. Not good. 

Several days later, Ford did circulate an email recapping the gist of that risk committee meeting, including three new due diligence criteria that bank employees were supposed to apply to Epstein’s transactions — but that email only went to senior bank executives, not junior ones working directly on Epstein’s accounts

How much responsibility does Ford bear for that error? You tell me. It is the job of the senior compliance officer to assure that decisions about compliance procedures reach all relevant employees, and that didn’t happen here. Then again, if the senior compliance officer assigns those duties to an assistant who blithely says, “Oh sure, took care of that ages ago,” should we really expect a CCO to reconfirm every action an assistant supposedly took? (It’s also worth noting that, according to the New York Times column, Ford is the only still working at Deutsche Bank. For all we know, she may have been the one raising alarms about Epstein.)

Lastly, one other character in this mess is AML OFFICER-2 — apparently a mid-level compliance executive at Deutsche Bank who was supposed to implement those three due diligence criteria. We don’t know who AML OFFICER-2 is, but that person misinterpreted Ford’s three criteria to mean extra due diligence for Epstein transactions that seemed suspicious compared to his prior dealings. Which essentially made the whole effort pointless, since Epstein had been conducting suspicious transactions for years. 

Leave a Comment

You must be logged in to post a comment.