Deutsche Bank will pay a combined $627 million in penalties to U.K. and New York state regulators to settle charges that the bank did not monitor money laundering of $10 billion out of Russia in a trading scheme.
The U.K. Financial Conduct Authority and the New York Department of Financial Services said in separate releases Monday that Deutsche Bank was used by unidentified customers to transfer the money out of Russia to offshore banks from 2012 to 2015 in what the NYDFS called a “mirror trading” scheme.
The New York agency fined the bank $425 million; the FCA, £163 million ($202 million).
The agencies worked together on the investigation.
The FCA said Deutsche Bank's failings allowed its Russia-based subsidiary, DB Moscow, to execute more than 2,400 pairs of trades that mirrored each other to transfer more than $6 billion from Russia to overseas bank accounts in Cyprus, Estonia, Latvia and other countries. The orders for both sides of the mirror trades were received by DB Moscow, which executed them at the same time, the FCA said.
“This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade," Maria Vullo, NYDFS superintendent, said in the agency's release. "The offsetting trades here lacked economic purpose and could have been used to facilitate money laundering or enable other illicit conduct, and today’s action sends a clear message that DFS will not tolerate such conduct."
Deutsche Bank is cooperating with other regulators and law enforcement authorities, which have their own ongoing investigations into these securities trades, the bank said in a statement on its website.
