Deutsche Bank's asset management arm DWS has agreed to pay $25m in penalties to settle two charges by the Securities and Exchange Commission into alleged ESG "misstatements" and anti-money laundering violations.

The US financial watchdog said today (25 September) that DWS Investment Management Americas would pay $19m for "materially misleading statements" about its controls for incorporating ESG factors into research and investment recommendations. 

The firm will also pay $6bn for failing to develop an anti-money laundering (AML) programme for its US mutual fund business tailored to their specific risks, as required by law.

Regarding the ESG enforcement action, the SEC said that despite marketing itself as an ESG leader, from August 2018 until late 2021 DWS failed to implement certain provisions of its global ESG integration policy "as it had led clients and investors to believe it would". 

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The asset manager also failed to adopt and implement policies and procedures "reasonably designed" to ensure that its public statements about the ESG integrated products were accurate, the regulator added.

"Investment advisers must ensure that their actions conform to their words," said Sanjay Wadhwa, deputy director of the SEC's division of enforcement and head of its climate and ESG task force. 

"Here, DWS advertised that ESG was in its DNA, but, as the SEC's order finds, its investment professionals failed to follow the ESG investment processes that it marketed."

DWS has been embroiled in a greenwashing scandal since 2021, when its former group sustainability officer Desiree Fixler alleged the firm was misrepresenting its ESG credentials. 

The claims led US federal prosecutors, the SEC and German regulator BaFin to launch investigations. In the two years since then, DWS' headquarters have been raided by investigators and its chief executive Asoka Woehrmann resigned. 

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A spokesperson for DWS said the firm was "pleased to have resolved these matters", which it said relate to "certain historic processes, procedures and marketing practices the firm has since addressed".

"The SEC ESG order, following an extensive two-year examination, finds no misstatements in relation to our financial disclosures or in the prospectuses of our funds," it said. 

"We have consistently stated that we stand by our financial disclosures and the disclosures in our fund prospectuses."

The firm said it had "learned many lessons from the ever-evolving regulatory environment and are fully committed to continuing to improve".