Deutsche Bank to Pay Millions in Fines for Helping Wealthy Russians Launder US$ 10 Billion

Published: 31 January 2017

By N'dea Akei Yancey-Bragg

Deutsche Bank said Monday it will pay US$ 625 million to US and UK financial authorities to settle charges that it helped Russian investors launder up to US$ 10 billion.


 The fine is the latest hit for the German bank which has been involved in several financial scandals. 

At the end of last year the bank agreed to pay US$ 7.2 billion to the US Department of Justice for selling dubious mortgage securities. 

 This time Germany’s largest bank has agreed to pay US$ 425 million to New York’s Department of Financial Services (DFS) and 163 million pounds (US$ 202 million) to the UK’s Financial Conduct Authority (FCA) to settle money laundering allegations.

 It is the largest fine ever imposed by the FCA for an offense of this kind. 

The US and the UK financial regulators accused Deutsche Bank managers of "failing to maintain an adequate anti-money laundering (AML) control framework" that would stop a long running “mirror-trading scheme” facilitated by the Moscow branch. 

Clients would purchase Russian stocks in Rubles through the bank’s Moscow office and then sell the exact same stock for US dollars through its London office, sometimes on the same day.

This is how customers used the branch to transfer more than US$ 6 billion from Russia to overseas accounts including in Cyprus, Estonia, Latvia.

The FCA said the Moscow branch of the bank executed more than 2,400 pairs of trades that mirrored each other between April 2012 and October 2014.

The bank also facilitated another 3,400 "suspicious 'one-sided'" trades worth US$ 3.8 billion the FCA said involved the same clients that were conducting the mirror trading.

"The purpose of the mirror trades was the conversion of Rubles into US Dollars and the covert transfer of those funds out of Russia, which is highly suggestive of financial crime," the FCA statement said.

Bloomberg cited reports that some of the clients who used the scheme were close associates of President Vladimir Putin, Arkady and Boris Rotenberg as well as Chechens close to their leaders.