Deutsche fined $630 million for failures over Russian money-laundering

Tue Jan 31, 2017 4:00am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Karen Freifeld and Arno Schuetze

NEW YORK/FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE: Quote) agreed to pay $630 million in fines to U.S. and UK regulators for failing to prevent around $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 blue-chip stocks in rubles 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 $425 million.

"The bank missed numerous opportunities to detect, 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 million pounds ($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 for anti 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 $7.2 billion agreement with the U.S. Department of Justice earlier this month over the misselling of mortgage-backed securities, lift much of the uncertainty swirling around the bank over its exposure to fines and enforcement.

Deutsche Bank said the Russia-related 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.   Continued...

A statue is pictured next to the logo of Germany's Deutsche Bank in Frankfurt, Germany September 30, 2016. REUTERS/Kai Pfaffenbach/File Photo