Deutsche linked to Russian dirty money

LONDON • A German bank that loaned about US$300 million (S$420 million) to United States President Donald Trump played a prominent role in a global money laundering scandal run by Russian criminals with ties to the Kremlin, according to The Guardian.

Deutsche Bank was named as one of dozens of Western financial institutions that processed at least US$20 billion in money of "criminal origin" from Russia, in a scheme dubbed the "Global Laundromat".

In Britain, law enforcement agencies are probing how a group of politically well-connected Russians was able to launder billions of dollars in cash through British-registered companies by making fictional loans to one another that were underwritten by Russian businesses.

The companies would subsequently default on the debts, which were followed by court rulings by judges in Moldova enforcing judgments against the firms. This let Russian bank accounts transfer huge sums to Moldova legally. The money was then sent to accounts in Latvia with Trasta Komercbanka.

Deutsche Bank, Germany's biggest lender, acted as a "correspondent bank" for Trasta until 2015, providing dollar-denominated services to Trasta's non-resident Russian clients. This service was used to move the money from Latvia to banks around the globe.

The scheme ran from 2010 to 2014. During this period, many Wall Street banks quit Latvia, citing concerns that the country had become a centre for international money laundering, especially from Russia, reported The Guardian.

From 2014, only Deutsche Bank and Germany's Commerzbank were willing to accept international dollar transfers from Latvian banks. Deutsche Bank withdrew correspondent services to Trasta Bank only in September 2015. Six months later, Latvian regulators shut down Trasta, citing repeated violations and a failure to deal with its money laundering risk.

Deutsche Bank cut ties to another key Laundromat bank - Moldova's Moldindconbank - in 2012.

Last month, it emerged that Deutsche Bank secretly reviewed multiple loans worth about US$300 million to Mr Trump to see if there was a connection to Russia.

Sources said the review found no evidence of a Moscow link, including to other members of Mr Trump's family, including daughter Ivanka, her husband Jared Kushner and Mr Kushner's mother Seryl Stadtmauer.

A version of this article appeared in the print edition of The Straits Times on March 23, 2017, with the headline 'Deutsche linked to Russian dirty money'. Print Edition | Subscribe