Federal Financial Supervisory Authority imposes EUR 23 million administrative fines to Deutsche Bank

On 4 February 2025, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) imposed administrative fines amounting to EUR 23.05 million on Deutsche Bank AG. „The company breached organisational requirements under the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) in connection with the sale of derivatives.” – according to the press release.

In addition, its Postbank branch disregarded the obligation to record investment advice and repeatedly failed to comply with the requirements of the German Payment Accounts Act (Zahlungskontengesetz – ZKG) regarding the account switching service.

Following allegations relating to the sale of currency derivatives in Spain, Deutsche Bank AG took too long to investigate the infringements and remedy the shortcomings. The sale of derivatives led to sanctioning proceedings initiated by the Spanish National Securities Market Commission (CNMV). The company did not make appropriate organisational arrangements to speed up the investigation of the breaches of the law and to implement measures to remedy the situation.

Furthermore, Postbank – a branch of Deutsche Bank AG – violated the requirement to record telephone conversations in connection with investment services. Exceptions to this rule were granted during the COVID-19 pandemic. After they expired, however, the company at times failed to take measures to ensure that the content of investment advice given by telephone was once again electronically recorded.

In addition, applications submitted to Postbank for the account switching service under the ZKG were not processed or were only processed with a delay in multiple cases.

BaFin has addressed all three issues in administrative fine proceedings. The total fine of EUR 23.05 million comprises EUR 14.8 million for the violations relating to derivatives sales, EUR 4.6 million for the violations relating to telephone recording and EUR 3.65 million for the violations relating to the switching service.

The administrative fine order is final and binding.

Background information

Compliance

Investment services enterprises must take and implement appropriate precautions through adequate organisation in order to ensure the proper provision of investment services and to minimise delays in efforts to identify and remedy problems in the event of disruptions to business operations. This is set out in section 80 (1) sentence 2 no. 1 of the WpHG. The regulation stipulates general requirements for a comprehensive compliance organisation in investment services enterprises. In particular, they must prevent conflicts of interest, such as those that may arise when restoring proper business operations.

Furthermore, they are obliged to record the content of telephone conversations and electronic communications when providing services using means of distance communication and in connection with client orders. The record-keeping obligation serves to preserve evidence and thus to ensure investor protection, market surveillance and legal certainty. Its purpose is to ensure that the terms of all orders placed by investors can be verified and checked against the transactions executed by investment firms. This is set out in section 83 (3) sentence 1 of the WpHG.

BaFin may impose a fine if an enterprise violates the organisational and record-keeping obligations under the WpHG. The maximum amount for each fine is EUR 5 million or up to 10% of total revenue.

Switching services

Consumers switching bank accounts when changing credit institutions are entitled to request assistance from the payment service providers involved. This obligation to provide assistance with switching accounts is set out in section 22 and section 23 (1) of the ZKG. Accordingly, payment service providers, including credit institutions, are obliged to implement the switching service, for example by providing certain information and taking the measures required to arrange the transfer of consumers’ payment activities.

BaFin may impose a fine if payment service providers fail to meet their obligations relating to switching accounts or fail to do so within the prescribed period. The maximum fine for a violation of section 22 of the ZKG is EUR 50,000 (new payment service provider), and the maximum fine for a violation of section 23 (1) of the ZKG is EUR 300,000 (previous payment service provider).