The UK financial watchdog is in the early stages of an investigation into whether Deutsche Bank breached anti money-laundering laws for its Moscow clients, adding an extra flank to a burgeoning international probe.
The Financial Conduct Authority’s involvement adds to inquiries by at least two other bodies around the world into so-called mirror trades executed in London and Moscow by the bank. New York’s banking regulator asked Deutsche for information about a failed offer to bribe a Moscow employee as part of its investigation.
The FCA’s attention — which was sparked by Deutsche Bank itself reporting the matter to both the UK watchdog and its German equivalent, BaFin — is at an early stage. The bank remains under so-called “special measures” instigated by the FCA after a slew of regulatory issues, including the Libor-rigging scandal.
Deutsche Bank, the FCA and BaFin declined to comment.
The matter also has the potential to morph into a criminal investigation as it is on the radar of criminal prosecutors at the UK’s Serious Fraud Office, which said it was aware of the allegations. It declined to comment further.
The trades under scrutiny by the FCA first came to light following a request from the Russian central bank late last year. Deutsche Bank then undertook an internal probe looking at trades carried out over a period of four years ending in early 2015. Last month it said it had placed several individuals from its Moscow unit on leave.
The trades in question involve securities bought in roubles through Deutsche Bank in Moscow by Russian clients, at the same time the bank bought the same securities in western currencies from various entities through its London business.
The practice is known as mirror trades and regulators are concerned that it could be used by Russian clients to bypass money-laundering rules to illegally move funds out of the country. They are also scrutinising how quickly Deutsche Bank reported the suspicious trades.
The matter is yet another conduct issue with which John Cryan, who took over as chief executive this month, must grapple.
The bank paid a record $2.5bn to US and UK regulators in April to settle allegations that its traders manipulated the Libor rate. Nearly half of the FCA’s £227m portion of that fine included a penalty for misleading the regulator.
Meanwhile, a BaFin report into Libor-rigging found that Deutsche Bank’s senior management allegedly acted negligently, and its former co-head Anshu Jain may have knowingly misled the German central bank — allegations Mr Jain and the bank strenuously deny.
BaFin is due to make its final determinations on potential supervisory measures following Deutsche Bank’s formal response to its report.
The Financial Conduct Authority’s involvement adds to inquiries by at least two other bodies around the world into so-called mirror trades executed in London and Moscow by the bank. New York’s banking regulator asked Deutsche for information about a failed offer to bribe a Moscow employee as part of its investigation.
The FCA’s attention — which was sparked by Deutsche Bank itself reporting the matter to both the UK watchdog and its German equivalent, BaFin — is at an early stage. The bank remains under so-called “special measures” instigated by the FCA after a slew of regulatory issues, including the Libor-rigging scandal.
Deutsche Bank, the FCA and BaFin declined to comment.
 |
Deutsche Bank
|
The matter also has the potential to morph into a criminal investigation as it is on the radar of criminal prosecutors at the UK’s Serious Fraud Office, which said it was aware of the allegations. It declined to comment further.
The trades under scrutiny by the FCA first came to light following a request from the Russian central bank late last year. Deutsche Bank then undertook an internal probe looking at trades carried out over a period of four years ending in early 2015. Last month it said it had placed several individuals from its Moscow unit on leave.
The trades in question involve securities bought in roubles through Deutsche Bank in Moscow by Russian clients, at the same time the bank bought the same securities in western currencies from various entities through its London business.
The practice is known as mirror trades and regulators are concerned that it could be used by Russian clients to bypass money-laundering rules to illegally move funds out of the country. They are also scrutinising how quickly Deutsche Bank reported the suspicious trades.
The matter is yet another conduct issue with which John Cryan, who took over as chief executive this month, must grapple.
The bank paid a record $2.5bn to US and UK regulators in April to settle allegations that its traders manipulated the Libor rate. Nearly half of the FCA’s £227m portion of that fine included a penalty for misleading the regulator.
Meanwhile, a BaFin report into Libor-rigging found that Deutsche Bank’s senior management allegedly acted negligently, and its former co-head Anshu Jain may have knowingly misled the German central bank — allegations Mr Jain and the bank strenuously deny.
BaFin is due to make its final determinations on potential supervisory measures following Deutsche Bank’s formal response to its report.
