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January 31, 2017updated 04 Apr 2017 1:19pm

Deutsche Bank fined $630m over money laundering claims

Deutsche Bank has agreed to pay $630m in total to US and UK authorities to settle allegations of engaging in a money laundering scheme to move money out of Russia, and for exposing the UK financial system to the risks of financial crime.

By Verdict Staff

Deutsche Bank has agreed to pay $630m in total to US and UK authorities to settle allegations of engaging in a money laundering scheme to move money out of Russia, and for exposing the UK financial system to the risks of financial crime.

New York’s Department of Financial Services (DFS) alleged that the bank engaged in a scheme that involved clients buying stock in Moscow with rubles, and soon afterwards selling them through the bank's London branch.

The regulator added that these mirror trades, which occurred between the bank's Moscow, London and New York offices, laundered $10bn out of Russia.

The bank agreed to pay $425m in fine to DFS, and also agreed to appoint an independent monitor for its New York branch.

Superintendent Vullo said: “This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade. The offsetting trades here lacked economic purpose and could have been used to facilitate money laundering or enable other illicit conduct, and today’s action sends a clear message that DFS will not tolerate such conduct.”

The UK’s Financial Conduct Authority (FCA) fined the bank £163m ($202.8m) for failing to maintain an adequate anti-money laundering (AML) control framework between 2012 and 2015.

The fine is the largest ever imposed for AML controls failings, the British watchdog said.

FCA said that the insufficient AML control framework allowed unidentified customers to transfer billions from Russia to offshore bank accounts in a manner “that is highly suggestive of financial crime”. 

FCA director of enforcement and market oversight Mark Steward said: Deutsche Bank was obliged to establish and maintain an effective AML control framework. By failing to do so, Deutsche Bank put itself at risk of being used to facilitate financial crime and exposed the UK to the risk of financial crime. The size of the fine reflects the seriousness of Deutsche Bank’s failings.”

The latest settlements comes shortly after the bank reached  a $7.2bn agreement with the U.S. Department of Justice earlier this month over the issuance and underwriting of residential mortgage-backed securities.

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