Rocked by allegations of illegal mirror trading worth billions of dollars, Deutsche Bank has come under further scrutiny by the US Department of Justice, with the investigation widened to include possible violation of sanctions against Russia, the Financial Times reported on October 25, citing unnamed sources.
This could make the first case of a major Wall Street company being investigated for breaching the sanctions imposed in summer 2014 over Moscow's actions in Ukraine.
The Department of Justice and New York's Department of Financial Services are reportedly expanding the scope of the probe into the bank because some transactions under question allegedly involved US dollars and a former banker who is a US citizen. The banker's wife also recently added a new dimension to the scandal by accusing Deutsche Bank of illegally accessing her personal account held at Raiffeisen.
Deutsche Bank is under investigation for so-called mirror trades whereby Russian clients are said to have bought stocks in rubles via the bank and simultaneously made trades through London in which the bank purchased the same stocks at similar amounts in dollars.
Such transactions could have enabled Russians to move money offshore without telling the authorities.
Deutsche Bank, a lender whose ties with Russia span 134 years, announced on September 18 that it was closing its Moscow Corporate Banking & Securities Business by the end of year following the money laundering allegations.
However, banking insiders told bne IntelliNews the bank was forced to shut down its investment banking division in Moscow after the Central Bank of Russia (CBR) threatened to revoke its main banking license amid the furore over allegations.
Only the intervention by a senior German politician, believed to be Minister of Finance Wolfgang Schaeuble, and a pledge to wind down the onshore Corporate Banking & Securities Business averted that course of action, according to a senior Moscow banker familiar with the central bank's dealings.
"Deutsche has quite nicely stage-managed their exit from [investment banking in Russia]," the banker told bne IntelliNews at the time. "It could have been much worse and the reality is that they were forced out."
Deutsche Bank rejected the reports about a threat to its licence in a subsequent statement.