German authorities raid 11 banks in tax fraud investigation

Focus thought to be on clients of former Deutsche Bank unit in BVI

Germany’s largest lender stressed that the investigations are not directed against it, but against certain individuals.   Photograph: Bloomberg

Germany’s largest lender stressed that the investigations are not directed against it, but against certain individuals. Photograph: Bloomberg

 

German criminal prosecutors, police and tax investigators on Wednesday began raiding 11 German lenders looking for evidence of suspected tax fraud by clients of a former Deutsche Bank offshore unit.

The raids are taking place in Frankfurt and six other cities across Germany and involve officers from the Federal Criminal Police, the Hamburg State Office of Criminal investigation and six different regional tax authorities.

Eight individuals who were clients of a British Virgin Islands-based former Deutsche Bank unit are in the crosshairs of the investigators.

A person familiar with the investigation said that to his best knowledge, none of those suspects are Deutsche Bank employees.

Germany’s largest lender stressed that the investigations are not directed against it, but against certain individuals. “Deutsche Bank co-operates with the public prosecutor’s office and voluntarily submits all requested documents,” adding that it hence averted a search of its business premises.

“The raid is related with the raid of a large German lender in Frankfurt due to suspected money laundering on 29 and 30 November 2018,” Frankfurt criminal prosecutors who are leading the investigation said in a press release.

On those dates, more than 170 officers searched Deutsche Bank’s headquarters and other offices, rattling the confidence of clients, investors and regulators.

In February, the lender said that “negative Deutsche Bank-specific news, including the raid by state prosecutors on the bank’s premises in late November” were one factor contributing to a fourth quarter loss.

Misconduct

Deutsche Bank chief executive Christian Sewing said in January that “so far, we do not have any evidence for misconduct on our side”. According to a person briefed on the matter, this assessment still held on Wednesday.

The new raids on Wednesday also targeted the homes of the suspects in six different locations as well as the offices of four tax accountants and six Hamburg-based wealth managers.

“The defendants are wealthy individuals who are subject to German taxation,” the prosecutors wrote in a statement, adding that they are under suspicion of tax evasion.

“They are believed to have set up trusts on the British Virgin Islands with the support of a former subsidiary of a large German lender to hide investment income from German tax authorities and evaded paying tax,” said the statement.

At the core of the investigation is a small Virgin Islands-based unit that was part of Deutsche Bank’s Global Trust Solutions business that Deutsche sold to Bermuda-based lender NT Butterfield & Son. The transaction was announced in October 2017 and completed by the end of March 2018. Butterfield declined to comment. – Copyright The Financial Times Limited 2019