Investigation of financial fraud in Germany

German criminal prosecutors, police and tax investigators have raided 14 German banks looking for evidence of suspected tax fraud by clients of a former Deutsche Bank offshore unit.

The raids took place in Frankfurt and six other cities across Germany and involved 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 unit are in the crosshairs of the investigators.

A person familiar with the investigation told the Financial Times that to his best knowledge, none of those suspects were Deutsche employees.

Germany’s largest lender stressed that the investigations were 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 had 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’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.

Deutsche 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 the individuals were 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,” the statement said.

At the core of the investigation is a small Virgin Islands-based unit that was part of Deutsche’s Global Trust Solutions business and was later sold by Deutsche to Bermuda-based lender N.T. Butterfield & Son. The transaction was announced in October 2017 and completed by the end of March 2018. Butterfield declined to comment.

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