SEC hands $25m penalty to Deutsche Bank subsidiary for AML violations and ESG “misstatements”
The US Securities and Exchange Commission (SEC) has slapped a $25 million penalty on DWS Investment Management Americas Inc. (DIMA), a subsidiary of Deutsche Bank, in two separate enforcement actions.
SEC hands $25m penalty to DIMA, a Deutsche Bank subsidiary
The first addresses DIMA’s “failure” to create a mutual fund anti-money laundering (AML) programme, while the second concerns “misstatements” regarding the firm’s environmental, social and governance (ESG) investment processes.
Gurbir Grewal, director of the SEC’s division of enforcement, states that DIMA “advised mutual funds with billions of dollars in assets yet failed to ensure that the funds had an AML program tailored to their specific risks, as required by law”.
“Importantly, those AML obligations require mutual funds to establish and implement individualised programmes to detect and prevent money laundering and terrorism financing,” Grewal adds.
As part of the second enforcement action, the SEC alleges that DWS made “materially misleading” statements about how it incorporates ESG factors into research and recommendations for ESG products, including some actively managed mutual funds and separately managed accounts.
The SEC order finds that DWS described itself as a “leader” in ESG, but notes that from August 2018 until late 2021, it “failed” to conform to the ESG investment processes that it marketed.
“The order finds that DIMA also failed to adopt and implement policies and procedures reasonably designed to ensure that its public statements about the ESG integrated products were accurate.”
Without agreeing or denying the SEC’s charges, DIMA has agreed to a cease-and-desist order and a $6 million penalty for the AML action, and a cease-and-desist order, censure, and $19 million fine for the ESG action.
