
Deutsche Bank Says Software to Detect Money Laundering Had a Bug - oldjokes
https://www.nytimes.com/2019/05/22/business/deutsche-bank-money-laundering.html
======
andrewstuart2
As someone who works at a financial institution, it's news generally because
money laundering activity tends to be highly profitable for banks, since they
get to collect fees on those transactions. There are almost no incentives for
us to flag transactions on our own (unless we're being super humanitarian)
without legislation/regulation, because as long as they get their money
there's no downside except for victims of the crimes that the money originally
originated from.

At least in my opinion, the legislation and big-deal-making is merited in
cases like this, for the benefit of society.

~~~
candiodari
As an ex-consultant in the financial services sector I strongly disagree with
your assessment:

"there's no downside except for victims of the crimes that the money
originally originated from."

Why don't you detail what happens to people who get flagged by this software.
Ie either send or receive suspected laundered money and what the odds are of
such a flag actually resulting in a conviction.

If you get "flagged", ALL your funds are immediately blocked, your access
restricted however long they wish (meaning think 6 months). The odds of a flag
leading to a conviction are not even 2%. Even among those 2%, the vast
majority of "money launderers" are victims of deception (for example the old
"I'll send you money if you pay me 5/10/20% less of that money on a different
account").

So no victims ? The truth is that a few thousand people per month (never saw
absolute numbers but that seems a lower bound to me, and this is for a small
EU country) are denied access to their own money for months (sometimes years),
without so much as an explanation (it is illegal (and legally highly stupid)
for the bank to state for what reason your accounts are blocked). Not one of
their accounts, all of them. Needless to say, finding stories where this has
resulted in making a person or even entire family homeless is not hard.

"No downside". Well, not for banks. Not for governments. For everyone else,
extreme downsides.

~~~
voronoff
I don't think you read their comment correctly.

They are saying that their is no downside, outside of running foul of laws and
regulators, for banks to take money without review instead of flagging
transactions as suspicious.

Your response is about additional benefits for them taking the money without
questions.

------
eigenvector
If you read the original article cited by the NYT (it's in German), it is
using 'bug' not in the sense that all software has bugs, but in the sense of
'basic functionality was not working'. And that should be alarming, for
critical software.

[https://translate.google.com/translate?hl=&sl=de&tl=en&u=htt...](https://translate.google.com/translate?hl=&sl=de&tl=en&u=https%3A%2F%2Fwww.sueddeutsche.de%2Fwirtschaft%2Fdeutsche-
bank-it-panne-1.4456987)

~~~
tantalor
How can it possibly be both "basic functionality was not working" (high
severity) and "no suspicious transactions had slipped through" (low severity)?

~~~
Harvey-Specter
Pretty easy to understand if you swap what the software is detecting to
"asteroids which are on impact course with earth". Basic functionality is to
detect asteroids which are on a collision course with earth. The fact that no
undetected asteroids struck earth doesn't mean the software worked or didn't
work, nor does it mean that detecting asteroids which are on a collosion
course with earth is not basic functionality.

~~~
giarc
Absence of evidence doesn't mean evidence of absence.

------
slg
This is a little different because Deutsche Bank is already under scrutiny in
this area and therefore this is one piece of a larger story. It is similar to
when Facebook has bugs that expose private user information. It raises
questions like whether the "bug" is truly a bug or whether it is intended
behavior, whether no bug exists and this is simply an easy excuse for
inappropriate actions, whether the company actually cares about fixing the
issue, and so on.

EDIT: I am sure what happened in this thread. Several comments, including this
one, were decoupled from the comment they were responding to even though the
original wasn't deleted or flagged. Removing that context makes some of these
comments harder to follow.

------
chockZ
You need to consider the larger context of this story, especially given
Deutsche Bank's notorious reputation for allowing money laundering to happen
under it's watch. Also, take a look at the story published last week about
American Deutsche Bank executives refusing to pass along information to
federal regulators regarding suspicious transactions involving the President
of the United States and his son-in-law.

[https://www.nytimes.com/2019/05/19/business/deutsche-bank-
tr...](https://www.nytimes.com/2019/05/19/business/deutsche-bank-trump-
kushner.html)

------
YeGoblynQueenne
Financial software doesn't have bugs like web applications have bugs. In one
place I worked the software was older than every person who worked in the
company (from the time of punched cards) and the system had 5-9s uptime. The
majority of bugs had been caught and fixed by then and to change anything in
the software you had to submit a ten-page form. Plus, nobody I knew ever got
to work on the actual code running the company's main business - you only got
to write job running scripts and the like.

In that kind of shop a bug is a big deal.

~~~
coldcode
It's not a bug it's a feature: the bank rakes in money and no one is the
wiser.

------
maxencecornet
Paul Jorion, a french writer and ex-"the Bank of the European Union" employee,
said that he was pushed out of the company when he revealed a bug in risk-
calculation software

I'm pretty sure this bug was known for some time as well

------
smn1234
how convenient, with this in context
[https://www.nytimes.com/2019/03/18/business/trump-
deutsche-b...](https://www.nytimes.com/2019/03/18/business/trump-deutsche-
bank.html)

~~~
TACIXAT
Large loans and real estate deals are not the type of money laundering this
software detects. It is looking for unusual transaction flows between
accounts. For example, if an account receives large amounts money for
inconsistent purposes (e.g. computer services and farm equipment), or has
large amounts of money flow through it while maintaining a relatively low
average balance (e.g. 10 million received and sent when the account normally
has 40k in it).

While money is absolutely laundered via real estate and art, that's not what
this software detects. The podcast The Dark Money Files is really good if you
want to learn more about this. [1]

1\. [https://www.buzzsprout.com/242645](https://www.buzzsprout.com/242645)

------
chasingthewind
The Base Rate Fallacy [0] suggests there's often a lot more true negatives
than true positives. In this case a true negative is ignoring a non-fraudulent
transaction and a true-positive is catching a fraudulent transaction.

As someone who never engages in fraudulent transactions, if I were a DB
customer I'd be much more concerned about the false-negative rate of such
software.

[0]
[https://en.wikipedia.org/wiki/Base_rate_fallacy](https://en.wikipedia.org/wiki/Base_rate_fallacy)

------
otakucode
Financial software is special. It has to be. The value of our currency is
literally directly dependent upon it. Imagine what would happen if tomorrow we
woke up and it was revealed that there had been a persistent manipulation of
the financial systems. When Walmart or some other large company goes to
another country and says "we have $5 million, we need good and services" they
would be met with "we don't believe those numbers in your bank software MEAN
anything. PROVE they represent money and aren't just a bug." At that point,
everything stops.

Well, everything that has no built-in means of proving legitimacy. I've read
multiple times that the only real thing Bitcoin offers is protection against
counterfeiting and no one gives a damn about that because faith in the system
backs our money so counterfeiting isn't a big problem. In the hypothetical
scenario, though, it becomes the primary problem, and overnight only
cryptocurrency can be proven to mean anything at all. Everything else would
just be unreliable nonsense numbers based on rotted code.

------
duxup
It would be interesting to know what the bug is.

I can't translate the German site as I can't really get to it due to a popup.

A math problem, just not checking some transactions, something else?

~~~
supakeen
"In one of these applications, two of the 121 parameters were not defined
correctly. What the exact parameters are, the speaker did not want to say."

Is all the further information in the German article.

~~~
Merem
Which resulted in an incomplete second check of payments.

(Just to add the other small part.)

------
outside1234
Yeah right. Just like VW's emissions bug.

~~~
hef19898
Somebody say again we Germans aren't good at software!

------
craftoman
I remember similar answer was given from a bunch of corrupted employees after
the Greek state found that their anti-corruption algorithms (written in Python
btw) stopped reporting for incidents. In the end, after the inspection from
major supervisors found that those guys working at the post over there
"accidentally disabled" the reporting service and blamed the software.

------
SrslyJosh
How incredibly convenient.

------
pablooliva
The software was as buggy as management overseeing regulation of shady
transactions at the firm:
[https://duckduckgo.com/?q=deutsche+bank+whistleblower&t=cano...](https://duckduckgo.com/?q=deutsche+bank+whistleblower&t=canonical&ia=web)

------
NTDF9
One bug? That's laughable to anyone writing any software

------
spikels
This is news?! All software has bugs. NYTimes is taking advantage of the
general public’s ignorance of this fact to imply something sinister. Without
additional information - such as it specifically targeted certain transactions
- that is misleading.

Remember this when you read articles about subjects you are not knowledgeable
about.

[https://en.m.wikipedia.org/wiki/Gell-
Mann_amnesia_effect](https://en.m.wikipedia.org/wiki/Gell-Mann_amnesia_effect)

~~~
fareesh
It seems to me as an outsider that everyone's standard for honesty has been
reduced because it's an acceptable sacrifice if it means sliming the opposing
political party. This has undertones of conveying that the President "got
away" with this activity, which is the intended takeaway from the article.

The quality of journalism seems to have been hit hardest by this philosophy.
For over a year all of us around the world have been hearing about something
called a Mueller Investigation from the news media in the USA, and now despite
the fact that it has cleared the President and his campaign of the allegations
made, not a single media outlet has walked back the insinuations made with
this style of reporting which, through lawyerspeak essentially declared him
guilty without saying it outright, but close enough for it to convince the
general public.

It's really unfortunate because the media has a very important responsibility.
Based on the behavior of journalists that I see on social media, it seems like
overgrown children are running things. One such example is a lady named Sarah
Jeong who has written some really disgusting tweets on social media, and was
given a relatively important position at NYT.

~~~
sjg007
The Mueller Report that totally exonerates the President and yet the President
won't release it in full to Congress. The only one sliming the President is
Trump himself.

~~~
fareesh
Why would that affect the principal conclusions of the report? The conclusion
can't change when the redacted portion is unredacted. The person who came to
the conclusion did so after writing those redacted sections, right?

~~~
sjg007
It's called showing your work.

[https://www.washingtonpost.com/world/national-
security/muell...](https://www.washingtonpost.com/world/national-
security/mueller-complained-that-barrs-letter-did-not-capture-context-of-
trump-
probe/2019/04/30/d3c8fdb6-6b7b-11e9-a66d-a82d3f3d96d5_story.html?utm_term=.cb96f919a588)

~~~
fareesh
Yes but he showed the work and arrived at a conclusion as well. I am not
referring to Mr. Barr's letter so the article you linked is not really
relevant. The investigation team themselves reviewed all material and came to
a conclusion.

The premise is that this investigation team was seen by the entire country as
a fair party to conduct an investigation and reach a conclusion. Now that the
conclusion is not what the news media was suggesting all this time, there's
all kinds of skepticism and wanting to see the work.

This is an echo of 2016 again. The news media alluded to an entirely different
election result, the result was the complete opposite, and slowly everyone
started to question how the media could be so wrong again.

It seems like everyone's standard for truth is "if reality contradicts the
media it means something is being hidden" as opposed to "the media was wrong
because they are bad at this"

~~~
sjg007
From the WSJ article above: “The summary letter the Department sent to
Congress and released to the public late in the afternoon of March 24 did not
fully capture the context, nature, and substance of this office’s work and
conclusions,” Mueller wrote. “There is now public confusion about critical
aspects of the results of our investigation. This threatens to undermine a
central purpose for which the Department appointed the Special Counsel: to
assure full public confidence in the outcome of the investigations.”

~~~
fareesh
Right, but I'm not referring to the summary at all so I don't know why it's a
part of the discussion. The actual report itself has the same conclusions.

------
NikolaeVarius
Bug or feature?

Also, wonder how they're verifying "The bank maintained that no suspicious
transactions had slipped through as a result."

~~~
gruez
1\. fix bug, run through the data again

or

2\. get a bunch of low level analysts or interns to review all past
transactions

~~~
wahern
3\. Executive: "Hey, Charlie, you think that bug missed anything?" Manager:
"None that I'm aware of."

------
kumarvvr
Interesting timing, considering all the subpoenas they are supposed to reply
to.

------
sova
Just one bug though. And it sounds like they found it. Phew.

------
mmanfrin
Cue $20 mil fine and $X bil profits washed clean.

------
carreau
> bug for 10 years

*backdoor

------
lawrenceg
I see some similarities here between VW Dieselgate and DB. Must be a German
thing :)

~~~
blattimwind
Germany is already kinda the money laundering capital of the EU.

~~~
outside1234
But only because Switzerland isn't in the EU.

------
NicoJuicy
For the ones that don't see the links, Trump had to show his bank records of
Deutsche Bank in the accusation of Russian money laundering.

And now they found a bug :)

------
bla3
Subjectively it feels like NYT publishes a lot more negative articles about
Deutsche Bank than about any other bank, or at least those articles get
upvoted much more frequently here. Does anyone know what's up with that? I
would've assumed that most banks are equally terrible.

~~~
fwip
Deutsche Bank is currently implicated in (or at the very least, relevant to)
ongoing news regarding the US President's finances.

That makes it more newsworthy.

~~~
repolfx
So, are the Germans the new Russians then? Sounds like having failed to pin a
dozen or so different crimes on Trump now his enemies are trying to harass his
banks in retaliation for working with him? A classic strategy. Any bank can be
found guilty of money laundering if the authorities want because the wording
of the laws are so vague.

~~~
rconti
If you're interested, this dates back decades, and Deutsche Bank has been
implicated in a lot of money laundering over the years.

If you're interested, there was a great podcast on the president's reliance on
Deutsche Bank overlooking his never-ending bankruptcies and refusal to pay
back loans, when no other bank would touch him.

[https://www.npr.org/programs/fresh-
air/2019/05/09/721726619/...](https://www.npr.org/programs/fresh-
air/2019/05/09/721726619/fresh-air-for-may-9-2019-deutsche-bank-and-trumps-
finances)

If you're not interested, you're just trolling.

~~~
repolfx
I'm interested but I've also read a lot about money laundering over the years,
and I know you could easily say "Barclays has been implicated in a lot of
money laundering" or "HSBC has been" or "JP Morgan has been". Every bank has
been rapped repeatedly because the laws boil down to "don't let criminals use
banking services", which is an incredibly hard problem. _Maybe_ Deutsche has a
worse problem than other banks, I'm not sure, I'd want to see figures. But
having seen how tightly linked AML is with politics, I'll reserve judgement on
Trump and Deutsche.

