The Securities and Exchange Commission charged registered investment adviser DWS Investment Management Americas (DIMA or DWS), a subsidiary of Deutsche Bank.
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This is in two separate enforcement actions, one addressing its failure to develop a mutual fund Anti-Money Laundering (AML) program, and the other concerning misstatements regarding its Environmental, Social, and Governance (ESG) investment process. To settle the charges, DIMA agreed to pay a total of $25 million in penalties.
In the AML action, the SEC’s order finds that DIMA caused mutual funds it advised to fail to develop and implement a reasonably designed AML program to comply with the Bank Secrecy Act and applicable Financial Crimes Enforcement Network regulations.
The order also finds 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.
In the second enforcement action, the SEC’s order finds 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 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 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.
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. ■