As part of an international investigation, Deutsche Bank AG has located and identified as much as $4 billion in “suspicious” transactions related to the bank’s Russian operations. This $4 billion amount is on top of the $6 billion in alleged mirror trades the company is examining.
What does that mean for the German bank? That as much as $10 billion in total trades may not have been evaluated for money laundering as its clients transferred money out of Russia.
According to anonymous sources, Germany’s largest lender shared these findings with international authorities in September. It was previously reported that United States prosecutors were already looking into whether the bank’s handling of the mirror trades may have run afoul of U.S. anti-money laundering regulations and rules.
Russia’s central bank imposed a small fine on Deutsche Bank after investigating some of the bank’s trading practices. However, the U.S. Justice Department’s probe continues. If regulators find violations in laws or regulations, the overall number of trades could be one element in determining an ultimate penalty and/or fine.
The bank’s internal review was launched as many of the company’s other activities were under international scrutiny. The bank paid about $2.75 billion to settle a United States probe into certain violations as well as United States and British investigations into the rigging of interest rates. The bank admitted misconduct in both cases.
This fall, Deutsche Bank said that its review of Russian transactions had led it to discover several violations of the bank’s internal policies and many deficiencies in controls. As a result, the lender told its investors that it had increased its litigation reserves by more than $1.3 billion in order to cover possible liabilities stemming from its operations in Russia.
The mirror trades under investigation involved the bank’s clients buying Russian shares for rubles and simultaneously selling them in the United Kingdom, usually for U.S. dollars.
While that type of trading is legal in some circumstances, it can also be used to evade United States reporting rules.
Just recently, Deutsche Bank closed down much of its Russian operations, claiming that it wanted to simplify and streamline operations. The bank also said it has taken disciplinary action against multiple individuals.
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