Dubai regulator fines Deutsche Bank $8.4m

Dubai's regulator has imposed a $8.4m fine on Deutsche Bank for "serious contraventions" relating to wealth management procedures.

"Those contraventions include misleading the DFSA, failures in internal governance and systems and controls and in its client take-on and anti-money laundering processes," the regulator said in a statement.

While a modest sum for the global bank, reputational damage from the fine could resonate beyond the confines of the Dubai International Finance Centre, where Deutsche faces more serious regulatory woes.

Deutsche is expected to face a fine of as much as $1.5bn later this month in a settlement with regulators in the US and the UK over allegations that it manipulated the Libor benchmark interest rate.

The Dubai Financial Services Authority's action followed an investigation into Deutsche's activities between 2011 and 2014 for failing "to properly classify some of its customers as clients under DFSA rules."

When the regulator broadened its investigation, it uncovered that the private wealth management business "was operating in breach of DFSA requirements, but did not take adequate steps to address the issue."

"The provision of false information to the DFSA is a serious matter," said Ian Johnston, chief executive of the watchdog. "The DFSA expects firms to have governance structures and systems and controls in place which encourage compliance with our rules and which promptly identify and remedy any regulatory failings."

"Had Deutsche Bank DIFC co-operated at an early stage of the investigation, the matter would have been resolved far sooner and at significantly less costs to both the DFSA and the firm. The fine imposed in this case reflects the seriousness with which the DFSA views these failings," he added.

In a statement, the DFSA acknowledged that a small number of individuals provided false information and the bank has made changes to its operating model and improved its internal governance.

Deutsche said: "We have reviewed and subsequently upgraded our client on-boarding processes, and we are pleased the DFSA has acknowledged that Deutsche Bank has taken steps to remedy the matters described in the decision notice."

The Deutsche settlement comes as compliance officers in the DFSA say the regulator is taking a more proactive approach in supervision and enforcement, especially in relation to wealth management and private banking operations in the DIFC.

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