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Deutsche Racks Up $630 million Over Russian Money-Laundering Scheme

  • Sharnita Sanders
  • February 2, 2017
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It wasn’t too long ago that Deutsche Bank settled with U.S. Department of Justice for $7.2 billion under certain allegations of selling faulty mortgage securities. Now, the bank agreed to pay the United states and the UK $630 million for its failure to stop fraudulent trades made from Russia totaling an estimated $10 billion.

According to the accusations, the bank’s locations in Moscow, London and New York were part of a mirror trade scam between the years of 2011 and 2015. During that time, Russian blue-chip stock was purchased in rubles and sold for the same quantity at the same price through the banks London branch not long after. Russian blue-chip stock usually holds value around $2-$3 million. When it was cleared through the New York branch, for instance, the sellers almost always paid in U.S. dollars.

Because Britain’s Financial Conduct Authority found Deutsche Bank guilty of upholding sufficient anti-money laundering security during those years, the bank was fined 163 million pounds ($204 million).

The New York branch made similar moves, fining the bank $425 million saying “The bank missed numerous opportunities to detect, investigate and stop the scheme due to extensive compliance failures, allowing the scheme to continue for years.”

This will make the second largest settlement made by the bank as of late. It settled with the Department of Justice before the Obama administration left office. Deutsche Bank paid out $3.1 billion toward civil penalties and consumers under the settlement received $4.1 billion. Deutsche Banks settlement with the DOJ was quickly followed by the Swiss lender Credit Suisse, who had been accused by the DOJ of similar allegations.

As for the Russia settlement, Deutsche says it will continue to cooperate with regulators and authorities who are still holding their own investigations. It is also known that the DOJ settled with Deutsche not too long ago, it is not part of the Russia settlement.

Deutsche is settling things with its own employees. Through an investigation last September, the bank noted that the staff who had been involved in the scheme were promptly terminated. The bank found it wise to drop back on its investment activities made in Russia.

It was found that traders with Deutsche Bank’s Moscow branch started the scheme. The majority of the trades were made by a single party who acted as both sides of the transaction.

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Sharnita is a nerd at heart with a love of all things geeky. She also has this odd obsession with collecting books of all genre, ranging from contemporary to manga. When not writing, she can be found surfing the web and battling her online shopping addiction.