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Trump ties and executives stay on the hook in this week’s headlines

Deutsche Bank looks to cut Trump ties; Goldman Sachs holds leaders responsible for the 1MDB scandal and the art world remains a loophole for financial crime

Antonis Melis
November 6, 2020

Deutsche Bank looks to fix reputational damages caused by its association with Trump and his organisations.

Goldman Sachs makes executives financially liable for fines paid by the bank for their involvement in the 1MDB scandal.

The art world continues to be a key player in sanctions dodging, leading the US Treasury Department to call for improved compliance programmes to be put in place.

Read more on this week’s headlines below.

Tired of Trump, Deutsche Bank wants out but sees no good options

Deutsche Bank started lending to Trump in the late 1990’s, but this relationship has brought enough negative publicity for the bank to look into ending their relationship with the current US President.

The bank has about $340 million in loans outstanding to the Trump Organisation and has lent Trump more than $2 billion over the years.

A Deutsche Bank management committee that oversees reputational and other risk for the lender in the region has been discussing ways in which it could end its relationship with Trump. One of the approaches is to sell the loans in the secondary market, but this idea has not gained much traction as it is not clear who would want to buy the loans and the attendant problems that come with it.

This shows us that reputational risk seems to be much higher on Deutsche Bank’s agenda now.

Read the full article on Reuters

Goldman’s 1MDB lesson: Leaving top executives on the hook for corporate fines

Holding executives accountable for their actions is not a new concept. Experts have said that making senior managers financially liable for corporate fines will motivate them to take greater care with deals and transactions.

Goldman Sachs Chairman and CEO David M. Solomon said that they would be clawing back compensation from three bankers involved in the 1MDB scandal as well as its former executive team. Solomon and other senior executives would also have their compensation for 2020 reduced.

“While many good people worked on these transactions and tried to do the right thing, we recognize that we did not adequately address red flags and scrutinize the representations of certain members of the deal team,” Solomon wrote in a memo to staff.

Will other banks follow Goldman’s stance on leadership accountability?

Treasury Department Warns Art Market Against Sanctions Risks

The US Treasury Department is urging galleries, museums and other participants in the art market to implement compliance programs to mitigate risks from vulnerabilities in the market that could be exploited by malign actors to evade U.S. sanctions.

The Treasury’s Office of Foreign Assets Control said, in an advisory published last Friday that “Certain features of the market for high-value artworks make it attractive to those engaged in illicit financial activity, including sanctions evasion”

This is not the first time the art world is in the spotlight for being a method for money laundering and financial crime, and it is likely not to be the last until relevant compliance programmes are put in place.

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