Deutsche Bank Ends N.Y. Mirror-Trade Probe for $425 Million
Deutsche Bank AG has taken the first step to resolve allegations that it helped wealthy Russians launder billions of dollars, reaching a deal with New York’s Department of Financial Services that requires it to pay a $425 million penalty, the regulator said.
The New York settlement, approved by the bank on Monday, resolves allegations that Deutsche Bank employees used a “mirror-trading scheme” to help wealthy Russians move $10 billion out of that country from 2011 through 2014. The New York regulator found that a close relative of a Deutsche Bank supervisor in Moscow received bribes worth a quarter million dollars so that the supervisor would clear the trades.
The bank is also expected to reach a similar agreement as soon as Monday evening with the U.K.’s Financial Conduct Authority that will include an additional penalty of several hundred million dollars, a person familiar with the matter said.
The highest-profile probe into the matter is still under way. Federal prosecutors in the U.S. are pursuing a criminal investigation into whether the German lender’s internal controls failed to pick up the scheme, people with knowledge of the matter have said.
In addition to the financial penalty to the New York regulator, the bank will have to hire an independent monitor, its sixth in the U.S., according to Bloomberg research.
“This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade,” DFS Superintendent Maria Vullo said in a written statement. “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 $425 million fine is the largest enforcement penalty assessed by Vullo since she was named to lead the agency a year ago. She praised the bank for cooperating with the investigation.