SEC charges DWS with Anti-Money Laundering Violations and ESG Misstatements
According to a press announcement, the Securities and Exchange Commission (SEC) has recently taken action against DWS Investment Management Americas Inc. (DIMA), a subsidiary of Deutsche Bank AG, in two distinct enforcement actions. The firm has reportedly agreed to the sanctions including a $25 million fine.
Failure to Develop an Anti-Money Laundering (AML) Program
The SEC’s first enforcement action involves DWS Investment’s alleged failure to establish a proper AML program for mutual funds it advised. This program is essential for ensuring compliance with the Bank Secrecy Act and relevant Financial Crimes Enforcement Network (FinCEN) regulations.
When investment advisers, like DIMA, fail to establish robust AML programs, it can lead to vulnerabilities in detecting and preventing money laundering activities and terrorism financing. This has broader implications for the safety and integrity of the financial system.
Misstatements ESG Investment Process
In the second enforcement action, the SEC found that DWS Investment made materially misleading statements about its incorporation of ESG (Environmental, Social, and Governance) factors into investment decisions, specifically for ESG integrated products like certain mutual funds and separately managed accounts.
The order finds 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 allegedly failed to adequately implement certain provisions of its global ESG integration policy as it had led clients and investors to believe it would.
This action highlights the importance of accurate and transparent communication between investment advisers and investors. When DIMA reportedlt failed to adhere to its stated ESG policies, it raised concerns about the integrity of its investment processes, potentially misleading investors who were interested in ESG considerations.
These charges emphasize the significance of investment firms complying with regulatory requirements. AML programs can impact investors’ trust and decision-making. The charges against DWS Investment underscore the importance of scrutinizing an investment adviser’s claims and ensuring they align with their actual practices.
Without admitting or denying the SEC’s findings, DIMA agreed to a cease-and-desist order and a $6 million penalty in the AML action; and to a cease-and-desist order, censure, and a $19 million penalty in the ESG misstatements action.
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For more information on the firm and its representation of investors, visit WhiteSecuritiesLaw.com.Tags: Deutch bank, DWS Investment Management Americas, SEC sanctions Last modified: September 25, 2023