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| Deutsche Bank Fined in Plan to Help Russians Launder $10 Billion | Deutsche Bank Fined in Plan to Help Russians Launder $10 Billion |
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| Deutsche Bank agreed on Monday to pay a $425 million fine to New York State’s main financial regulator to settle charges that it helped Russian investors launder as much as $10 billion through its branches in Moscow, London and New York. | Deutsche Bank agreed on Monday to pay a $425 million fine to New York State’s main financial regulator to settle charges that it helped Russian investors launder as much as $10 billion through its branches in Moscow, London and New York. |
| The punishment represents the latest regulatory black eye for Deutsche Bank, Germany’s largest. In the last decade, it has been implicated in several financial scandals, including pushing toxic mortgages on investors and manipulating London’s main lending rate for its own financial gain. | The punishment represents the latest regulatory black eye for Deutsche Bank, Germany’s largest. In the last decade, it has been implicated in several financial scandals, including pushing toxic mortgages on investors and manipulating London’s main lending rate for its own financial gain. |
| Deutsche Bank also agreed to pay 163 million pounds, or about $204 million, in civil penalties in a separate settlement with the Financial Conduct Authority of Britain in the matter, the bank and the regulator said on Tuesday. | |
| In its investigation, the New York State Department of Financial Services found that between 2011 and 2015, a group of Deutsche Bank executives based mainly in Moscow and London helped wealthy Russians send money overseas by arranging stock trades that had no economic purpose other than disguising what the client was doing. | In its investigation, the New York State Department of Financial Services found that between 2011 and 2015, a group of Deutsche Bank executives based mainly in Moscow and London helped wealthy Russians send money overseas by arranging stock trades that had no economic purpose other than disguising what the client was doing. |
| What was known as the Russian mirror trading scheme “occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade,” said Maria T. Vullo, the superintendent for financial services at the department. “The offsetting trades here lacked economic purpose and could have been used to facilitate money laundering or enable other illicit conduct.” | What was known as the Russian mirror trading scheme “occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade,” said Maria T. Vullo, the superintendent for financial services at the department. “The offsetting trades here lacked economic purpose and could have been used to facilitate money laundering or enable other illicit conduct.” |
| Deutsche Bank, under its new chief executive, John Cryan, has been moving aggressively to restructure its trading and banking unit and reach deals with regulators worldwide in the many investigations into its conduct. | Deutsche Bank, under its new chief executive, John Cryan, has been moving aggressively to restructure its trading and banking unit and reach deals with regulators worldwide in the many investigations into its conduct. |
| An agreement with the Justice Department late last year to pay $7.2 billion for selling dubious mortgage securities addressed the most significant of these regulatory actions, given the size of the penalty. The Russian scheme, while much smaller in scale and in terms of economic harm to the bank, nevertheless highlights what has been a pervasive culture at Deutsche of skirting regulations to pad profits and personal bonuses, the Department of Financial Services said. | An agreement with the Justice Department late last year to pay $7.2 billion for selling dubious mortgage securities addressed the most significant of these regulatory actions, given the size of the penalty. The Russian scheme, while much smaller in scale and in terms of economic harm to the bank, nevertheless highlights what has been a pervasive culture at Deutsche of skirting regulations to pad profits and personal bonuses, the Department of Financial Services said. |
| In its order, the department said the scheme started in the years after the financial crisis when trading revenue in Deutsche’s Moscow office dropped by half. | In its order, the department said the scheme started in the years after the financial crisis when trading revenue in Deutsche’s Moscow office dropped by half. |
| Despite misgivings, traders proceeded with the transactions to secure commissions in slow markets, the order said. In one case, investigators found that a supervisor in the Moscow office had been paid $3.8 million for “consulting agreements” by the companies behind the trades. | Despite misgivings, traders proceeded with the transactions to secure commissions in slow markets, the order said. In one case, investigators found that a supervisor in the Moscow office had been paid $3.8 million for “consulting agreements” by the companies behind the trades. |
| Many of these dollar-based mirror transactions flowed through the office of Deutsche’s New York bank, which regulators here have often criticized for its lax compliance and monitoring systems. | Many of these dollar-based mirror transactions flowed through the office of Deutsche’s New York bank, which regulators here have often criticized for its lax compliance and monitoring systems. |
| More than $10 billion in laundered money was directed toward London and New York from Moscow, investigators found. The department discovered that Deutsche executives in Moscow had plenty of opportunities to crack down on scheme but did not do so. | More than $10 billion in laundered money was directed toward London and New York from Moscow, investigators found. The department discovered that Deutsche executives in Moscow had plenty of opportunities to crack down on scheme but did not do so. |
| And in particular, the bank’s Know Your Customer screens, a crucial cog in its compliance department that analyzes the identity and intent of a prospective client, failed on numerous occasions. | And in particular, the bank’s Know Your Customer screens, a crucial cog in its compliance department that analyzes the identity and intent of a prospective client, failed on numerous occasions. |
| In a statement, Deutsche Bank said it had cooperated with the investigation and had set aside sufficient cash in its reserves to cover the fine. | In a statement, Deutsche Bank said it had cooperated with the investigation and had set aside sufficient cash in its reserves to cover the fine. |
| As part of the punishment, Deutsche agreed to hire an independent monitor, who after being approved by the Department of Financial Services will review the bank’s relevant compliance system. | As part of the punishment, Deutsche agreed to hire an independent monitor, who after being approved by the Department of Financial Services will review the bank’s relevant compliance system. |