Tuesday 31 January 2017 00.00 EST
Authorities in US and UK issue fine after saying bank used offices in Moscow and London to move $10bn out of country
Deutsche Bank has been fined nearly $630m over alleged money laundering in Russia worth $10bn.
New York and British authorities issued the fine on Monday over claims the money was moved out of Russia using so-called mirror trades among the bank’s Moscow, London and New York offices, said New York State’s Department of Financial Services (DFS).
The US Department of Justice also is investigating the matter.
The fines are the latest development in a string of legal woes for the German banking giant, coming less than two weeks after the bank finalised a $7.2bn settlement with the Department of Justice 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 Superintendent Maria Vullo said in the statement: “This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade.”
The department fined the bank $425m, while FCA’s fine was £163m, or about $204m.
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 also will be required to hire an outside monitor to review its internal compliance measures.