Deutsche Bank AG is conducting an internal probe into possible money laundering by Russian clients that may involve about $6 billion of transactions over more than four years, according to people with knowledge of the situation.
The Bank of Russia approached Deutsche Bank in October asking the firm to examine the stock-trading activities of some clients in the country, said one person, who asked not to be identified because the discussions are private.
Benjamin Lawsky’s Department of Financial Services in New York is looking at unusual trading activity at the firm in Russia, another person said. Deutsche Bank is analyzing data from 2011 through early 2015, and has alerted Britain’s Financial Conduct Authority, the European Central Bank and Germany’s Bafin of the investigation, two people said.
“We are committed to participating in international efforts to detect and combat suspicious activities and we take strong action where we find evidence of misconduct,” Deutsche Bank said in an e-mailed statement Friday. “We have placed on leave a small number of individuals from our Moscow operation pending the results of an internal review.”
Deutsche Bank shares fell 1.7 percent to 27.61 euros in Frankfurt. They are up about 11 percent this year, compared with a 14 percent gain in the STOXX Europe 600 Banks Price Index.
The transactions being examined involve stocks bought by Russian clients in rubles through Deutsche Bank, and simultaneous trades through London in which the bank bought the same securities for similar amounts in U.S. dollars, the people said. Deutsche Bank is probing whether the transactions allowed Russian clients to move funds out of the country without properly alerting the authorities, one person said.
Officials for the FCA, the ECB, Bafin and the DFS declined to comment. The Bank of Russia in Moscow doesn’t comment on the actions of banks, according to the regulator’s press service. Deutsche Bank is also examining whether it should have alerted regulators sooner, one person said.
The value of the suspect trades may be higher than is currently being reviewed and the investigation is continuing, one person said. The role played by Deutsche Bank staff is still being looked at, the people said.
Tim Wiswell, who runs the firm’s Russian equities business, is among the employees who were placed on leave in April in connection with the probe, a person said. Wiswell declined to comment when reached on his mobile phone on Friday.
Deutsche Bank, which has one of the largest foreign investment banks in Russia, employs more than 1,000 people in Moscow and St. Petersburg across its businesses.
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About 60 billion rubles ($1.1 billion) of Russian shares were traded on average daily during the month of May in Moscow and London, according to the Moscow Exchange. Deutsche Bank ranks among the top dozen brokers of stocks on the Moscow Exchange, the data show.
Deutsche Bank, Germany’s biggest bank, was fined $2.5 billion in April by regulators in the U.S. and the U.K. for manipulating interest-rate benchmarks. The penalty is the biggest Deutsche Bank has paid for misconduct and comes on top of the 7.1 billion euros ($8 billion) it spent on litigation in the past three years. The firm’s outstanding legal challenges include probes into the rigging of benchmark foreign-exchange rates, as well as investigations into mortgage- and asset-backed securities dealings and alleged U.S. sanctions violations.
Manager Magazin, a monthly German magazine, reported in May that Deutsche Bank had informed Bafin about possible money laundering at its Moscow branch.
“The more aggressive stance of regulators is clearly driving this pre-emptive behavior,” said Andre Spicer at Cass Business School in London. “The bank wants to be able to show it has taken action before it was forced to by the regulator.”