FRANKFURT (Reuters) - Germany's financial watchdog has asked Deutsche Bank DBKGn.DE to provide information on its dealings with Danske Bank DANSKE.CO, which is caught up in money laundering allegations, a source close to the matter said on Tuesday.
After evaluating the data, the regulator - BaFin - will decide whether to launch a formal investigation into Deutsche Bank, the source said.
BaFin declined to comment.
A spokesman for Deutsche Bank said: “We are neither aware of any investigation by BaFin nor have we received any formal requests for information.”
On Monday, Deutsche Bank confirmed for the first time that it had acted as a correspondent bank for Danske Bank in Estonia.
“Our role was to process payments for Danske Bank,” a spokesman for Deutsche Bank said on Monday. “We terminated the relationship in 2015 after identifying suspicious activity.”
A spokesman for Danske Bank declined to comment on its relationship with Deutsche Bank.
A whistleblower, who revealed alleged money laundering involving Danske Bank, had said on Monday that a major European bank helped process up to $150 billion in suspicious payments, or nearly two-thirds of the transactions under scrutiny.
The source, who spoke on condition of anonymity, said BaFin was trying to determine to what extent Deutsche, as correspondent bank, should have been aware of who was behind the transactions it was helping to process.
A finance industry expert at a major consulting firm said that regulators increasingly expect correspondent banks to know the senders and receivers of the funds they help to transfer, especially in high risk regions.
The Wall Street Journal reported on Tuesday that Deutsche Bank found in an internal investigation that it handled about $150 billion in potentially suspicious transactions for Danske Bank. A Deutsche Bank spokesman declined to comment on the Journal report.
In September, BaFin ordered Deutsche Bank to do more to prevent money laundering and “terrorist financing,” and appointed a third party to assess progress.
Deutsche Bank is restructuring to recover from three years of losses and has been trying to draw a line under a legal and regulatory issues that the group has been caught up in since the financial crisis.
The bank’s shares were down 4 percent in late trading in Frankfurt, and are down 48 percent so far this year.
Reporting by Andreas Framke, Tom Sims and Arno Schuetze; Additional reporting by Stine Jacobsen in Copenhagen; Editing by Riham Alkousaa/Kathrin Jones/Michelle Martin/Jane Merriman
Our Standards: The Thomson Reuters Trust Principles.