Deutsche Bank Fined $630m Over Money Laundering
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.