LONDON • Deutsche Bank was fined US$629 million (S$892 million) by the British and US authorities for compliance failures that saw the bank help wealthy Russians move about US$10 billion out of the country using transactions that were likely thinly veiled attempts to cover up financial crime.
The UK Financial Conduct Authority (FCA) issued a £163 million (S$289 million) fine yesterday, hours after New York's Department of Financial Services fined the bank US$425 million, for failures over the so-called "mirror trades".
A criminal investigation by the United States Justice Department is ongoing into the trades, which were used to convert roubles into US dollars and transfer the money out of Russia.
The deals come weeks after Deutsche Bank agreed to a US$7.2 billion settlement to resolve a US investigation into its sales of toxic mortgage debt. While the bank has been pressing to wrap up regulatory reviews, investigations into whether it manipulated foreign currency rates and precious metals prices have not been resolved.
From April 2012 to October 2014, mirror trades were used by customers to transfer more than US$6 billion from Russia, through the German lender's arm in Britain, to overseas bank accounts including in Cyprus, Estonia and Latvia, the FCA said. Another nearly US$4 billion in suspicious "one-sided trades" were also carried out.
Deutsche Bank chief administrative officer Karl von Rohr said in a memo to staff that the bank is making progress towards resolving the investigations.
The mirror trades allowed clients to buy local blue chip shares for roubles, while the same stocks would be sold in London for US dollars to obtain the US currency.
Although such trades can be legal, there were a lack of controls in place at Deutsche Bank to prevent money laundering and other offences.
The New York regulator said on Monday it also appeared that a close relative of a Deutsche Bank supervisor in Moscow received bribes worth a quarter million US dollars so that the supervisor would clear the trades.
The bank received the FCA's standard 30 per cent discount on the bulk of the penalty for cooperating with the probe at an early stage. Nearly 6,000 pairs of suspicious mirror trades were carried out during the period, the FCA said.
Shares of the bank rose as much as 2.1 per cent when markets opened in Frankfurt yesterday.