Deutsche fined for failures over Russian money-laundering
NEW YORK/ FRANKFURT: Deutsche Bank agreed to pay US$ 630 million in fines to US and UK regulators for failing to prevent around US$10 billion in suspicious trades being laundered out of Russia, settling a second major legal case this month.
The scheme involved so- called mirror trades between the bank’s Moscow, London and New York offices from 2011 to 2015, in which it bought Russian bluechip stocks in roubles on behalf of clients and sold the identical quantity of the same stocks at the same price through its London branch shortly afterwards.
“The offsetting trades here lacked economic purpose and could have been used to facilitate money laundering or enable other illicit conduct,” the New York Department of Financial Services said, which fined Deutsche Bank US$ 425 million.
“The bank missed numerous oppor tuni t ie s to detec t , investigate and stop the scheme due to extensive compliance failures, allowing the scheme to continue for years.”
Britain’s Financial Conduct Authority separately fined Deutsche Bank 163 mi l l ion pounds ( US$ 204 million) for failing to maintain an adequate anti-money laundering controls between 2012 and 2015, allowing customers to transfer billions from Russia to offshore bank accounts “in a manner that is highly suggestive of financial crime”.
It is the largest financial penalty
The offsetting trades here lacked economic purpose and could have been used to facilitate money laundering or enable other illicit conduct. New York Department of Financial Services
for ant i money- laundering controls failings yet imposed by the FCA or its predecessor, the Financial Services Authority.
The Russian case settlements, on the heels of a US$ 7.2 billion agreementwiththeUSDepartment of Justice earlier this month over the misselling of mortgagebacked securities, lift much of the uncertainty swirling around the bank over its exposure to fines and enforcement.
Deutsche Bank said the Russiarelated settlement amounts were “materially reflected” in existing litigation reserves. It added, however, it was still cooperating with other regulators and authorities who had their own ongoing investigations.
Its shares rose 1.5 per cent to the top of Germany’s blue- chip index at 18.88 euros in early trade.
The US Department of Justice, which also has been investigating the suspicious trades, is not party to the deal. — Reuters