DWS Fined $25M for ESG, AML Violations
The Securities and Exchange Commission (SEC) has fined DWS Investment Management Americas Inc. (DIMA), a subsidiary of Deutsche Bank AG, $25 million.
The violations are failing to develop a mutual fund anti-money laundering (AML) programme and making false statements about its environmental, social, and governance (ESG) investment process.
AML Violations
The SEC found that DIMA caused mutual funds it advised to fail to develop and implement a reasonably designed AML programme to comply with the Bank Secrecy Act and applicable Financial Crimes Enforcement Network regulations.
The order also found that DIMA caused such mutual funds' failure to adopt and implement policies and procedures reasonably designed to detect activities indicative of money laundering and to conduct AML training specific to the mutual funds' business.
ESG Misstatements
The SEC also found that DIMA made materially misleading statements about its controls for incorporating ESG factors into research and investment recommendations for ESG-integrated products, including certain actively managed mutual funds and separately managed accounts.
The order found that DIMA marketed itself as a leader in ESG that adhered to specific policies for integrating ESG considerations into its investments; however, from August 2018 until late 2021, DIMA failed to adequately implement certain provisions of its global ESG integration policy as it had led clients and investors to believe it would.
The order finds that DIMA also failed to adopt and implement policies and procedures reasonably designed to ensure that its public statements about the ESG-integrated products were accurate.
Penalties
DIMA agreed to a cease-and-desist order and a $6 million penalty in the AML action and a $19 million penalty in the ESG misstatements action.
Conclusion
The SEC's enforcement actions against DIMA are a reminder to all investment advisers of the importance of complying with AML and ESG disclosure requirements. Investment advisers must ensure that their AML programmes are tailored to their specific risks and that their ESG claims are accurate and substantiated.
To view and compare company ESG Ratings and Sustainability Reports, visit our Company ESG Profiles page.
Source: SEC
