The BaFin financial supervisory authority imposed a EUR
23.05 million fine on Deutsche Bank AG for violations of various regulatory
obligations under German law.
The fines relate to the company’s failure to adhere to the
Securities Trading Act (WpHG) in connection with the distribution of
derivatives, along with Postbank’s failure to comply with recording obligations
for investment advice and account change assistance requirements under the
Payment Accounts Act (ZKG).
Deutsche Bank Penalized for Derivatives and Compliance
Failures
Finance Magnates reached out to Deutsche Bank AG for a
comment. A spokesperson said: “As communicated by BaFin, Deutsche Bank has
accepted a fine of approximately 23 million euros in three regulatory offence
proceedings. This fine is completely covered by existing provisions and will
not impact 2025 financials.”
BaFin’s investigation focused on Deutsche Bank‘s handling of
currency derivatives in Spain. The bank took an insufficiently timely approach
to investigating and remedying legal breaches in the distribution of these
derivatives. This failure led to proceedings by Spain’s Securities Commission
(CNMV), which found Deutsche Bank did not take adequate organizational measures
to address the violations promptly.
Additionally, Postbank, a subsidiary of Deutsche Bank, was
found to have violated its telephone recording obligations for investment
services. During the COVID-19 pandemic, temporary exceptions had allowed for
flexibility, but once these exceptions expired, Postbank did not implement the
necessary measures to ensure telephone consultations were properly recorded
electronically.
The spokesperson added: “These proceedings are now
concluded. Shortcomings included delays in the internal investigation of
incidents related to some financial derivatives transactions in Spain;
prolonged application of exemptions related to the COVID-19 pandemic for
telephone consultations with investment advisors at Postbank; and deficiencies
in the account switching service at Postbank up to August 2023, during the
Unity migration. Deutsche Bank has fully cooperated with BaFin in all matters.
Additionally, processes in the affected areas have been improved and controls
have been strengthened.”
Postbank Fined for Account Change Violations
Postbank was also cited for failing to properly handle
customer applications related to account change assistance, as required by the
ZKG.
The total fine of EUR 23.05 million is divided into three
parts: EUR 14.8 million for the “derivative distribution” issue, EUR 4.6
million for the “telephone recording” violation, and EUR 3.65 million for
failures in “currency transparent aid” for account changes.
Investment Firms Face Fines for Regulatory Violations
BaFin’s decision is legally binding. The fine highlights the
importance of investment services firms ensuring robust organizational
practices that guarantee compliance with regulatory obligations, particularly
in mitigating delays when investigating breaches and implementing corrective
measures. Investment firms must also record telephone and electronic
communications related to customer orders to protect investor rights and
maintain legal certainty.
Failure to meet these obligations can result in fines, with
the maximum fine for organizational breaches under the WpHG being EUR 5 million
or up to 10% of total turnover. Similarly, violations of the ZKG related to
account change assistance can result in fines up to EUR 300,000.
This article was written by Tareq Sikder at www.financemagnates.com.
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