Deutsche Bank Fined $630m Over Money Laun­der­ing

The Economic Times - - Around The World -

New York: New York and British au­thor­i­ties slapped nearly $ 630 mil­lion in fines on Ger­man bank­ing gi­ant Deutsche Bank over al­leged money laun­der­ing in Rus­sia, New York State’s De­part­ment of Fi­nan­cial Ser­vices an­nounced. The scheme il­le­gally moved $10 bil­lion out of Rus­sia, us­ing so­called mir­ror trades among the bank’s Mos­cow, Lon­don and New York of­fices, au­thor­i­ties said. The US jus­tice de­part­ment is also in­ves­ti­gat­ing the mat­ter.

The fines were the lat­est de­vel­op­mentinthestringofle­gal­woes­forthe Ger­man bank­ing gi­ant, com­ing less than two weeks af­ter the bank fi­nalised a $7.2-bil­lion set­tle­ment with the US jus­tice de­part­ment over its role in the 2008 global fi­nan­cial cri­sis. The New York au­thor­i­ties said in a state­ment they were joined by Bri­tain’s Fi­nan­cial Con­duct Author­ity in pe­nal­is­ing the bank af­ter find­ing per­va­sive weak­nesses in Deutsche Bank’s in­ter­nal safe­guards for money laun­der­ing and client risk. DFS fined the bank $425 mil­lion while FCA’s fine was p163 mil­lion, or about $204 mil­lion.

“This Rus­sia n mir­ror-t radi ng scheme oc­curred while the bank was on clear notice of se­ri­ous and wide­spread com­pli­ance is­sues dat­ing back a decade,” DFS su­per­in­ten­dent Maria Vullo said in the state­ment. Bank units tasked with le­gal com­pli­ance and pre­vent­ing money laun­der­ing were un­der­staffed and in­ef­fec­tive, the DFS said.

In “mir­ror” trades, clients would pur­chase stocks in rou­bles in Mos­cow while other clients who were re­lated or even had the same owner would sell the same stock at the same price through the bank’s Lon­don branch.

“By con­vert­ing rou­bles into dol­lars through se­cu­rity trades that had no dis­cernible eco­nomic pur­pose, the scheme was a means for bad ac­tors within a fi­nan­cial in­sti­tu­tion to achieve im­proper ends while evad­ing com­pli­ance with ap­pli­ca­ble laws,” ac­cord­ing to the le­gal doc­u­ment de­tail­ing the set­tle­ment with DFS.

In ad­di­tion to pay­ing the fines, Deutsche Bank will also be re­quired to hire an out­side mon­i­tor to re­view its in­ter­nal com­pli­ance mea­sures.

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