US banking regulators have ordered Deutsche Bank, a German global banking and financial services company, to improve its weak compliance systems and risk controls.

People familiar with the matter were quoted by the Wall Street Journal as saying that the Federal Reserve Bank of New York and New York state’s Department of Financial Services want the bank to revamp its technology and compliance procedures through a "memorandum of understanding" (MOU).

Most severe form of informal action, an MOU is normally used when a bank has numerous deficiencies that regulators believe can be corrected by current management.

The MOU took effect in 2012 and is still in place, according to the publication. The New York Fed has set a mid-2015 deadline to correct a list of high-priority issues, sources told the news agency.

Deutsche Bank received a letter in December 2013 from the New York Fed, which highlighted that financial reports produced by some of the bank’s US divisions was of low quality, erroneous and untrustworthy.

The letter termed the shortcomings equal to a "systemic breakdown" and "expose the firm to significant operational risk and misstated regulatory reports."

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The German bank already has taken necessary measures to improve systems that send real-time trade confirmations to counterparties and process end-of-day transaction reports, among other areas, people familiar with bank operations told the news agency.