Deutsche Bank Said Near Mirror-Trade Deal With U.K., N.Y.by , , and
Bank could resolve probes of billions moved out of Russia
U.S. said to continue criminal investigation of Moscow trades
Deutsche Bank AG is in advanced discussions with U.K. and New York State regulators to settle allegations that it helped move billions of dollars out of Russia without properly alerting authorities, two people familiar with the matter said. A settlement could come as soon as Monday evening.
The U.K.’s Financial Conduct Authority and New York’s Department of Financial Services are conducting civil investigations of the so-called mirror trades by Deutsche Bank’s Moscow office. The settlement amount wasn’t immediately known.
The U.K. resolution is expected to be comparable to the agency’s larger settlements in recent years, which have been in the hundreds of millions of pounds, one of the people familiar with the matter said.
The U.S. Justice Department is separately pursuing a criminal investigation, people with knowledge of the matter have said.
The expected civil settlement was reported earlier by Reuters. Deutsche Bank and the Financial Conduct Authority declined to comment.
Such a settlement would come weeks after Deutsche Bank agreed to a $7.2 billion civil penalty to resolve a U.S. investigation into its sales of toxic mortgage debt. The bank has taken steps to wrap up several regulatory reviews, but investigations into whether it manipulated foreign-currency rates and precious metals prices haven’t been resolved.
The Russia probe focused on trades that may have allowed clients to move as much as $10 billion out of the country from 2012 through 2014. Among them were mirror trades, in which a Deutsche Bank counterparty in Russia would buy local blue-chip shares for rubles, while the same stocks would be sold in London for dollars, reviews conducted by the German lender and the local central bank determined.
Although such trades are legal in some cases, the Justice Department was examining whether Deutsche Bank broke anti-money-laundering protocols by not properly vetting them, people familiar with the matter have said. An internal audit by Deutsche Bank found a “systemic” failure in internal controls meant to prevent money laundering and financial crime.
Since its internal audit, the bank has cut much of its operation in Russia. It has also reorganized its regulation, compliance and anti-financial crime operations into a new structure with a global overseer.
Over the last few years, the New York Department of Financial Services, which has the power to rescind a firm’s banking license, has levied billions of dollars of fines against banks that operate in the state.