Deutsche Bank's suspect Moscow trades total $10bn

Deutsche Bank's suspect Moscow trades total $10bn
By bne IntelliNews December 22, 2015

Mirror-trading and other suspect transactions allegedly performed through Deutsche Bank for Russian clients could have amounted to $10bn, much greater than previously assumed, news wires reported on December 22, citing unidentified sources close to the investigation results.

The Frankfurt-based lender told international watchdogs that it found a total of $10bn worth of suspicious trades, including $6bn of so-called mirror trades that allowed Russian customers to move money across borders without alerting the authorities, the report said, according to Reuters. This potentially allowed the clients to breach the sanctions against Russia that were imposed after its 2014 annexation of Crimea.

Bloomberg also reported that Deutsche Bank identified an additional $4bn in suspicious trades after the $6bn in mirror trading cited three months ago.

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. Deutsche Bank rejected the claim.

Meanwhile, it was reported on December 15 that Deutsche may be as fined as little as $5,000 by Russian regulators in connection with the current laundering probe. The Russian investigation found no significant abuse of anti-laundering controls connected with mirror trades between Moscow and London and will fine the bank for largely technical shortcomings, Bloomberg reported, citing unidentified sources.

The German bank can expect far harsher treatment from US and British market watchdogs, who haven't shirked from slapping bulge bracket investment banks with seven-figure fines in the last four years.

Apparently anticipating a big hit, Deutsche Bank hiked its litigation reserves by $1.3bn in the third quarter mainly to cover alleged violations at the lender's Russian unit.