JPMorgan Chase has reached a tentative settlement with the sexual abuse victims of Jeffrey Epstein. One of the lead lawyers for the victims said the bank was ready to pay $290 million for resolution. JPMorgan had provided services to Epstein from about 1998 to 2013, designating him a “high risk client” in 2006. The lawsuit claims that the bank ignored repeated warnings about Epstein and his engagement in sex trafficking. The complaint also alleges that the bank had ignored red flags because of the value of Epstein as a wealthy client. Epstein was registered as a sex offender and pleaded guilty in a 2008 Florida case to soliciting prostitution from a teenager.
After Epstein’s relationship with JPMorgan ended, he became a customer of Deutsche Bank. The same lawyers for the victims negotiated another tentative $75 million settlement with Deutsche Bank earlier this year.
JPMorgan has said that it should not be held liable and would have dropped Epstein as a client sooner if they had been aware of the criminal activity.
JPMorgan is still dealing with a lawsuit brought by the government of the US Virgin Islands accusing the bank of facilitating Epstein’s abuse. The Virgin Islands claim that JPMorgan should be required to pay the damages for facilitating Epstein’s establishment of a sex-trafficking operation on his privately owned island near St. Thomas.
Financial Institutions: Know Your Customer & the Responsibility of Preventing Sex Trafficking
Financial institutions are required to perform due diligence on their customers. They are required to follow Know Your Customer (KYC) regulations and guidelines. Considering that JPMorgan has stated that they were unaware of Epstein’s activities, a more proficient KYC and due diligence process could have kept the bank out of court. Deutsche Bank has stated, “We acknowledge our error onboarding Epstein in 2013, and the weaknesses in our processes, and have learnt from our mistakes and our shortcomings.”
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