Federal police on Thursday raided the Frankfurt offices of Deutsche Bank.
Money obtained illegally may have been transferred to accounts at Deutsche Bank, which failed to report the suspicions that the accounts may have been used to launder money, Frankfurt prosecutors said.
Prosecutors said they were looking at whether Deutsche Bank may have assisted clients to set up offshore companies in tax havens, so that funds transferred to accounts at Deutsche Bank could get around anti-money laundering safeguards.
More than 900 customers were served by a Deutsche Bank subsidiary registered on the British Virgin Islands, generating a volume of 311 million euros, it is alleged.
During raids of a number of Deutsche Bank offices across the city, which were confirmed in a statement from the bank, officials seized paperwork and electronic documents.
The claims had first surfaced in the "Panama Papers" investigation, published by an worldwide consortium of journalists in 2016. More details will be communicated as soon as these become known.
Shares in Deutsche Bank fell 2.75 to €8.36 by 1000 GMT, against a DAX blue-chip index up 0.6%.
Deutsche Bank has been sanctioned in the past for failing to tackle money laundering.
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The trouble with authorities comes at a time when Deutsche continued to face problems with its business.
The raids are the latest embarrassment for embattled Deutsche Bank, which has repeatedly been rapped by regulators for lax money laundering controls.
Two years ago, the release of the Panama Papers gave taxpayers around the world an unprecedented look at offshore tax havens.
It was fined more than $600 million by USA and United Kingdom authorities in January 2017 for allowing customers to transfer $10 billion out of Russian Federation in what regulators said was "highly suggestive of financial crime".
Most recently, Denmark's biggest bank, Danske Bank, admitted that some $235 billion in suspicious money had flown through its Estonian branch from 2007 to 2015.
US Attorney General Loretta Lynch said at the time that "Deutsche Bank did not merely mislead investors: it contributed to an global financial crisis".
German prosecutors found no evidence of criminal wrongdoing, and the bank's top-level executives were deemed not to have been involved in the scandal.
The latest raid is a new blow to Deutsche Bank, which has been hammered by a string of scandals linked to its pre-2008 crisis attempts to compete with Wall Street investment banking giants..
Deutsche Bank is in the throes of a major restructuring plan, with 7,000 jobs to go by the end of 2019.