(Bloomberg) — The Federal Reserve has privately told Deutsche Bank AG that its compliance programs aren’t up to snuff, signaling that the scandal-plagued bank is failing to adhere to a number of past accords with U.S. regulators, according to people familiar with the matter.

The Fed’s recent warning came in an annual regulatory assessment that said Deutsche Bank hadn’t improved its risk management practices despite being under confidential agreements with the central bank to fix the issues, the people said. The assessment letter has the German bank’s leaders bracing for potential sanctions, including the possibility of a large fine, said one person briefed on the matter.

The Fed’s latest admonishment is a setback for Chief Executive Officer Christian Sewing, who has been working diligently to repair Deutsche Bank’s relations with banking supervisors following a tumultuous period in which the lender stumbled from one crisis to the next. He now has a new hurdle to overcome — and it’s likely a big one.

Read More: Deutsche Bank’s Days of Dysfunction Finally Retreat Under Sewing

Deutsche Bank spokesman Dylan Riddle said the firm doesn’t comment on any communications it has with regulators. A Fed spokesman also declined to comment.

Deutsche Bank has had multiple dust-ups with U.S. regulators — including foreign-exchange violations and ties to money-laundering cases. The lender has also been the subject of numerous Fed orders on how the company manages risks, and the firm’s efforts to overhaul its controls haven’t convinced the agency that the bank’s problems are behind it, the people said.

In a move that showed the firm is focusing on compliance issues, Deutsche Bank last week elevated Joe Salama, who had been general counsel for the Americas, to be global head of anti-financial crime and group money laundering officer. He succeeded Stephan Wilken, who had been in the post since October 2018.

While discussions with the Fed over Deutsche Bank’s ongoing missteps are in their early stages, the bank has faced similar rifts with the agency in recent years and been fined for them. The punishments include a $137 million settlement over allegations that traders rigged currency benchmarks and a $41 million penalty for money-laundering vulnerabilities.

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Despite the Fed scrutiny, there are signs that Deutsche Bank has improved its risk management, at least in some areas. The firm emerged from the March collapse of Archegos Capital Management unscathed, while other banks that did business with Bill Hwang’s family office lost more than $10 billion combined.

The turn of fortune after years of gloom has lifted Deutsche Bank’s share price to outperform rivals as Sewing’s revamp has taken hold, and are up 38% this year.

Still, more trouble remains a possibility, as the Fed taking aim at the bank’s compliance systems shows. The stock is still trading at one of the steepest discounts to book value among European lenders with shares still far below their peak, and the bank has lost money in five of the past six years.

(Updates with share performance in ninth paragraph.)

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