Deutsche Bank was fined £163 million (€189m) by UK regulators for "serious" compliance failures related to allegations it helped wealthy Russians move billions of dollars out of the country, hours after the German lender settled a similar investigation in New York.
Deutsche Bank was used by customers to transfer about $10 billion from Russia to unknown bank accounts “in a manner that is highly suggestive of financial crime,” the Financial Conduct Authority said in a statement Tuesday.
The money was moved by the front office of Deutsche Bank’s Russian arm between 2012 and 2015. New York’s Department of Financial Services fined the bank $425 million (€394m) on Monday and a criminal investigation by the US Justice Department is ongoing.
Toxic mortgage fines
The deals come weeks after Deutsche Bank agreed to a $7.2 billion civil penalty to resolve a US investigation into its sales of toxic mortgage debt. While the bank has been pressing to wrap up regulatory reviews, investigations into whether it manipulated foreign-currency rates and precious metals prices haven’t been resolved.
The so-called mirror trades were used by Deutsche Bank customers to transfer more than $6 billion from Russia, through Deutsche Bank in the UK, to overseas bank accounts in places such as Cyprus, Estonia and Latvia, the FCA said. Nearly $4 billion more suspicious “one-sided trades” were also carried out.
Blue-chip shares
The mirror trades allowed clients to buy local blue-chip shares for rubles, while the same stocks would be sold in London for dollars, to allow them to obtain the US currency. Although such trades can be legal, there was a lack of controls in place at Deutsche Bank to prevent money laundering and other offences.
“Financial crime is a risk to the UK financial system,” Mark Steward, director of enforcement and market oversight at the FCA, said in a statement. “We have repeatedly told firms how to comply with our anti-money laundering requirements and the failings of Deutsche Bank are simply unacceptable.”
Fines to settle the investigations into Russian securities trades were “materially reflected in existing litigation reserves”, Deutsche Bank said in a separate statement Tuesday morning. The bank received the FCA’s standard 30 per cent discount on the bulk of the penalty for co-operating with the investigation at an early stage.
Bloomberg
