U.S. Regulators Expand Probe Into Russia’s Deutsche Bank Over Money Laundering

U.S. Regulators Expand Probe Into Russia’s Deutsche Bank Over Money Laundering

United States regulators are expanding their investigation into money laundering allegedly perpetrated by Deutsche Bank AG in Russia. The investigation is also looking into breach of sanctions against Russia. The Financial Times reported the story over the weekend.

United States authorities are also delving into whether Deutsche Bank’s top executives gave the go-ahead for the alleged scheme.

The U.S. and the European Union (EU) imposed the first round of sanctions against Moscow in 2014 after the country annexed Crimea. The sanctions affect Russia’s defense, banking and energy sectors, as well as some Russian businessmen. In some cases, the sanctions levied against Russia prohibit United States companies from conducting business with certain Russian companies – especially if U.S. dollars are used in the transactions.

The United States Justice Department and the Department of Financial Services of New York (DFS) have increased the breadth of their investigation into Deutsche Bank because a few recent transactions supposedly involved a former banker who is a United States citizen using U.S. dollars.

The allegations state that the former Deutsche Bank employee bypassed economic sanctions by conducting a series of “mirror trades.” These trades consist of Russian clients buying securities using roubles with the assistance of Deutsche Bank’s Moscow office. They then sell identical securities for other currencies – including U.S. dollars – using the bank’s London office. Essentially, these deals allow for the movement of money from one country to another without going through the normal procedures for such cross-border transfers.

United States citizen and former chief of Deutsche Bank’s Russian equities desk, Tim Wiswell, was fired from his job earlier this year. He lost his job during the investigation by the U.S. and EU into the mirror trades and is now a central figure in the regulators’ probe.

The Financial Times reported that the potential worth of these mirror deals is estimated at about $6 billion.

This investigation is one of the first of its kind conducted by U.S. authorities regarding an alleged breach of Western economic sanctions against Russia.

The Financial Times quoted the bank as stating that, “Deutsche Bank has taken disciplinary measures with regards to certain individuals in this matter and will continue to do so with respect to others, as warranted.”

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