How ‘Mirror Trades’ Moved Billions From Russia: QuickTake Q&A

“Mirror trades” are at the root of more than $670 million in penalties that Deutsche Bank AG has agreed to pay U.S. and U.K. regulators, and the bank may face even more sanctions. The U.S. Justice Department continues to look into trades emanating from the bank’s Moscow office. And other lenders may still come under scrutiny, after Russia’s central bank said that Deutsche Bank wasn’t the only financial institution that helped clients make the transactions.

It’s two stock transactions, in two separate locations, potentially amounting to one sleight of hand -- taking money out of one market and moving it to another. Deutsche Bank helped clients buy Russian blue-chip shares in Moscow with local currency; at around the same time, it helped them sell the same quantity of shares in London. Voila: Rubles in Russia became dollars abroad. The proceeds often wound up in Cyprus or another offshore banking center.