Deutsche Bank SARs Reports Raise More Mueller Questions
The New York Times story that Deutsche Bank (DB) senior executives overrode the decision of their anti-money laundering (AML) professionals to file suspicious activity reports (SARs) based on unusual activity in the accounts controlled by Donald Trump and Jared Kushner raises even more questions about how the scope of the Mueller investigation was restricted.
The reports indicate that the bank’s AML systems flagged a number of transactions from Jared Kushner’s account to accounts in Russia in the summer of 2016. Other transactions in some of Donald Trump’s many limited liability accounts as well as the Donald Trump Foundation also were flagged as potential AML issues. The usual AML procedure for handling transactions flagged by internal systems as potential AML problems is to then pass the details on to a team that is trained to deal with such issues. That team will usually do some research into the purposes and details of the transaction and then pass that information to an even more specialized team that decides whether a SAR should be created and, after a management sign-off, passed on to the appropriate regulatory authority, in this case, the US Treasury.
At least in the case of the Kushner transactions, it appears that the second step in the AML review process was ignored, with the results of the original AML investigation being passed directly to the business line controlling the Kushner accounts, the private wealth management group in New York, instead of the specialized AML team. Executives at the private wealth management group then decided that SARs reports were not necessary for the transactions in question. Other transactions involving Trump and the Trump Foundation apparently were reviewed by the specialized AML team who recommended creating SARs reports but were overridden by Deutsche Bank management.
As important political figures, both Trump and Kushner should have been considered politically exposed persons (PEP) when it comes to AML procedures. As such, their accounts should receive enhanced scrutiny, but that scrutiny does not necessarily mean there will be an increased number of SARs reports, just an extra degree of due diligence by the bank. But, according to former bank employees, Deutsche Bank had not even implemented that enhanced PEP scrutiny for the Trump and Kushner accounts.
All of this is especially disconcerting because of Deutsche Bank is the only reputable big bank to still deal with Donald Trump and has massive loan exposure to him. In addition, the bank has a long and recent history of enabling money laundering. It was involved in a massive $10 billion money laundering scheme involving Russians from 2010 to 2014 and, just last summer, its AML procedures were found to be not just deficient but virtually non-existent in a number of Eurozone countries.
But it is even more disconcerting with regard to the Mueller investigation. Barr’s redacted version of the Mueller report contains no references to Deutsche Bank. It also appears that Mueller never subpoenaed DB for any records relating to Trump or Kushner, although that is not entirely clear. Trump apparently went into a rage in December 2017 and wanted to fire Mueller when he mistakenly believed Mueller was pursuing information from DB. As it turned out, the subpoenas for DB records in question were related to a separate federal inquiry into Kushner that probably originated in the Southern District of New York (SDNY). If Mueller did receive any information from DB, it was apparently passed on to that SDNY inquiry and not considered as part of his investigation.
Certainly, Adam Schiff is skeptical that Mueller ever looked at Trump and Kushner DB transactions at all as part of his inquiry. As Schiff noted in February, “If the special counsel hasn’t subpoenaed Deutsche Bank, he can’t be doing much of a money laundering investigation. So, that’s what concerns me — that that red line has been enforced, whether by the deputy attorney general or by some other party at the Justice Department. But that leaves the country exposed.”
If that is true, that Mueller never even looked at Trump’s and Kushner’s business dealings, especially in 2016 and 2017, that seems like a serious hole in an investigation that was supposedly looking at a potential conspiracy with Russia. It is especially troubling that Kushner was apparently engaged in transactions with Russians that DB employees firmly believed warranted SARs reports during the 2016 campaign. In addition, suspicious transactions within the Trump Foundation’s accounts are also worrying because it has already been shown the Trump Foundation was being illegally used as “a virtual arm of Mr. Trump’s campaign”. And, while the nature of the concerns about Trump’s DB accounts’ activity is not detailed in the NY Times report, it would certainly be helpful to know who the other side of those transactions were.
The fact is we still do not know whether Mueller did any investigation into Trump’s and Kushner’s business dealings, especially in 2016 and 2017. If he did and found nothing of substance, then fine. That seems highly unlikely because it would be hard to understand why Trump is fighting so hard to prevent Congress from getting this information from DB if Mueller had already received it and found nothing. But if Mueller did not seek this DB data, it looks like yet another glaring hole in his investigation of a potential conspiracy with foreign powers, Russia in particular. And that leads to the next question, which is why he did not do that investigation and was he prevented from doing so. Based on what we know from how his investigation was restricted in other ways, that seems like the most likely answer.