The U.S. Securities and Exchange Commission (SEC) announced two separate enforcement actions against DWS Investment Management Americas Inc. (DIMA or DWS), an affiliate of Deutsche Bank AG. The first action pertains to DIMA‘s negligence in establishing an Anti-Money Laundering (AML), while the second addresses misleading statements about its Environmental, Social, and Governance (ESG) investment practices. DIMA has consented to pay penalties totaling $25 million to resolve these charges.
In the AML-related action, the SEC determined that DIMA failed to ensure the mutual funds it advised had a robust AML program in line with the Bank Secrecy Act and relevant Financial Crimes Enforcement Network (FinCEN) regulations.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the importance of mutual funds having tailored AML programs to detect and counteract money laundering and terrorism financing.
The second action revealed that DIMA made false claims about its ESG investment processes. Despite promoting itself as an ESG leader and promising specific ESG integration practices, DIMA did not fully implement its global ESG policy from August 2018 to late 2021.
Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement, stressed the importance of investment advisers ensuring their practices align with their public statements.
The SEC’s orders found that DIMA‘s actions breached various regulations. To settle the charges, without admitting or denying the findings, DIMA has agreed to a cease-and-desist order. It will pay penalties of $6 million for the AML violations and $19 million for the ESG misrepresentations.
The Enforcement Division’s Asset Management Unit (AMU) spearheaded both investigations, with multiple SEC officials and teams contributing to the thorough examination and resolution of the cases.