Deutsche Bank Fined Due To Link To $10B Russian Scandal
Jan 31, 2017 06:48 PM EST
Deutsche Bank will pay hundreds of millions to US and UK regulators to settle probes into whether it helped covertly move $10 billion out of Russia through "mirror trading." Deutsche Bank helped convert roubles to dollars and disguise the origin of the money, this misbehaviour stretched across the Moscow, London, and New York offices.
The German lender will pay $425 million to New York's Department of Financial Services and £163 million to the UK Financial Conduct Authority (FCA) according to Business Insider. Deutsche Bank was used by unidentified customers to transfer $10 billion from Russia to offshore bank accounts in a way that is highly suggestive of financial crime.
The New York regulator announced its fine on Monday, while the FCA announced its settlement with the regulator on Tuesday. Deutsche Bank confirmed the fines in a statement on its website, noting that it has committed significant resources to improving its anti-money laundering controls.
Mirror trades are related with money laundering
"Mirror trades" involved a Russian client buying stocks in roubles from Deutsche Bank's Moscow office, then, this stock would be sold by another party with close links to the original player in London and the trade would be paid for in dollars. Except rather than those dollars being converted into roubles for the original client, they would go to countries such as Cyprus, Estonia, or Latvia, to a bank account closely connected to the originally party.
Deutsche Bank moved $6 billion this way and 2,400 pairs mirror trades were executed between April 2012 and October 2014. It is also possible that $3.8 billion may have been laundered out of Russia through one-sided trades.
The scheme could have been used for money laundering according to Reuters. This is one of many issues the bank is trying to deal with, earlier this month the lender agreed to pay $7.2 billion to US regulators over disputes it mis-sold mortgage-backed securities in the run-up to the financial crisis.