Deutsche Bank AG's offices including its headquarters in Frankfurt were being searched by prosecutors on Thursday in a money-laundering probe, prosecutors said in a statement. The inquiries focus on events in 2013 through 2018, a spokeswoman for the prosecutor's office said.
The Panama Papers are a set of millions of documents leaked in 2015 by Panamanian law firm Mossack Fonseca and Co linking offshore accounts to alleged fraud and tax evasion.
In September, Deutsche Bank was ordered by German regulators to tighten its controls to prevent money laundering and terrorist financing.
Deutsche Bank shares slid sharply after the news broke, and were down 3.75 per cent in midday trading in Frankfurt.
Deutsche Bank is one of the world's biggest banks and operates in 16 cities with more than 11,000 employees in large swathes of Europe, Asia and America.
Deutsche Bank shares have lost around half of their value this year, after the bank endured three years of losses and a series of financial and regulatory scandals.
US and British regulators fined the bank $630 million past year for allowing wealthy Russians to launder $10 billion in cash between 2012 and 2015.
It was fined more than $600 million by US 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".
Gerhard Schick, a member of parliament for the opposition Green party, said it was "particularly irritating" that the bank's current board members oversaw operations during the time in question.
Chief executive Christian Sewing, who took over in April, has been shedding jobs and making other cost cuts in an attempt to revive the bank's performance.
Citing people familiar with the matter, Bloomberg News had reported that Deutsche was the unnamed bank a Danske whistleblower said had handled nearly $150 billion of suspect transactions originating in the Danish firm's Estonian branch.
United Kingdom regulator Georgina Philippou said at the time: "This case stands out for the seriousness and duration of the breaches by Deutsche Bank - something reflected in the size of today's fine".
Deutsche Bank said it was cooperating with authorities and would release more details in due course.
An investigation by the U.S. Department of Justice is still ongoing.