German prosecutors raid Deutsche Bank over ‘green money laundering’ allegations

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ESG products have become a major asset class as a financial institution. (Case)

Frankfurt:

German prosecutors raided the offices of Deutsche Bank in Frankfurt on Tuesday as part of an investigation into allegations that the financial institution was marketing investment products as ‘greener’ than they are. were actually.

Investigators were carrying out “suspected investment fraud” searches at the offices of the bank and its asset management subsidiary DWS, Frankfurt prosecutors said in a statement.

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The searches were linked to “charges of greenwashing” at DWS, Deutsche Bank said in a statement.

DWS said it would “work with all relevant regulators and authorities,” according to the statement.

The charges were based on “statements made by a former DWS employee” who became a whistleblower for U.S. securities regulators in 2021, prosecutors said.

Investigators had found “sufficient evidence” that ESG (environmental, social and governance) standards were only considered “in a minority of investments” contrary to information contained in DWS’ “sales prospectus”, they specified.

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The investigation targeted “as yet unknown” DWS employees, prosecutors said.

The asset manager is already under investigation by federal prosecutors in the United States on suspicion of lying about the scale of its green investments.

ESG products have become a major asset class as financial institutions seek to align their portfolios with global climate goals.

US securities regulators last week introduced proposals to strengthen disclosure requirements on the growing number of ESG investments.

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Seeking to address the problem of “greenwashing”, the Securities and Exchange Commission said the measure was intended to avoid instances where a fund “might overstate its actual consideration of ESG factors”.

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