View more on these topics

Deutsche Bank fined over £500m after Russia money laundering probe

FCA logo new 2 620x430

The FCA has fined Deutsche Bank more than £163m for anti-money laundering failures between January 2012 and December 2015.

The fine is the largest ever imposed by the FCA or the FSA for anti-money laundering control failings.

The bank has also been fined $425m (£339.9m) by the New York State Department of Financial Services.

A statement from the FCA says Deutsche Bank failed to properly oversee new customer relationships and the booking of global business in the UK.

As a result of its inadequate controls, Deutsche Bank was used by unidentified customers to transfer approximately $10bn, of unknown origin, from Russia to offshore bank accounts in a manner the FCA says is “highly suggestive of financial crime”.

The front office of Deutsche Bank’s Russia-based subsidiary, DB Moscow, carried out more than 2,400 pairs of trades – called mirror trades – between April 2012 and October 2014.

The mirror trades were used by customers of Deutsche Bank and DB Moscow to transfer more than $6bn from Russia, through Deutsche Bank in the UK, to overseas bank accounts, including in Cyprus, Estonia, and Latvia.  The orders for both sides of the mirror trades were received by DB Moscow, which executed both sides at the same time.

The customers on the Moscow and London sides of the mirror trades were connected to each other and the volume and value of the securities was the same on both sides.

The FCA says the purpose of the mirror trades was the conversion of roubles into US dollars and the “covert” transfer of those funds out of Russia, which is highly suggestive of financial crime.

A further $3.8bn in suspicious “one-sided trades” also occurred. The FCA believes some, if not all, of an additional 3,400 trades formed one side of mirror trades and were often conducted by the same customers involved in the mirror trading.

FCA enforcement and market oversight director Mark Steward says: “Financial crime is a risk to the UK financial system. Deutsche Bank was obliged to establish and maintain an effective anti-money laundering 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. We have repeatedly told firms how to comply with our anti-money laundering requirements and the failings of Deutsche Bank are simply unacceptable. Other firms should take notice of today’s fine and look again at their own  procedures to ensure they do not face similar action.”

Deutsche Bank agreed to settle at an early stage of the FCA’s investigation and qualified for a 30 per cent discount in its fine, which otherwise would have been £229,076,224.

The discount does not apply to the £9.1m in commission that Deutsche Bank generated from the suspicious trading, which has been disgorged as part of the overall penalty meaning that the firm has received no financial benefit from the breach.

The FCA statement says: “Deutsche Bank was exceptionally cooperative with the FCA during this investigation and has committed significant resources to a large scale remediation programme to correct the deficiencies in its anti-money laundering control framework and customer files.”


Andrew Bailey BBA Conference 2012 480

FCA chief: Regulation has not stifled growth

FCA chief executive Andrew Bailey has claimed regulation has not stifled economic growth and competition since the financial crisis. In a conference speech in Berlin yesterday, Bailey defended the role of well-targeted regulation in promoting both stability, but also financial services competition. Bailey said: “Regulation – both prudential and conduct – is in some circles […]


FCA: ‘Era of bumper fines is over’

The FCA says it expects it to be harder to collect sizeable fines from financial services firms following the introduction of the senior managers regime. Speaking at the Practising Law Institute’s annual regulation seminar in London yesterday, FCA director of enforcement and market oversight Mark Steward said the total level of fines has reduced since […]

FCA logo new 3 620x430

FCA data protection breaches revealed

Details of a number of data protection breaches at the FCA have been revealed. A Freedom of Information request by The Times shows security failures including losing confidential enforcement-related papers and displaying personal details of 2,000 individuals applying for controlled function status. Alongside smaller data protection issues like failing to reply to data requests in […]

Tree - thumbnail

The politics of healthcare

Healthcare is already one of the key battlefields in May’s general election, with each of the main parties committing to deliver improvements to the NHS and public health.


News and expert analysis straight to your inbox

Sign up