US Continues Its Probe As Deutsche Bank Alleges $10B in Suspect Russia Trades

To date, Deutsche Bank AG (DB) says it has identified $10 billion in suspect trades that may not have been checked for money laundering. In the review, uncovered $6 billion of mirror trades involving its operations in Russia. According to a Russian central bank report, there are clients using rubles to purchase Russian shares and then selling them in London at the same time, usually for dollars. While mirror trades are legal in certain situations, they can be used to circumvent U.S. rules related to reporting money as it moves internationally. The German lender notified international authorities of its investigation a few months back.

According to Bloomberg, prosecutors in the United States have been investigating whether the bank’s dealings with the mirror trades violated U.S. rules regarding money laundering. Already, Russia’s central bank has fined Deutsche Bank after examining the latter’s trading in that country. Also, a source reportedly told Bloomberg that Russia’s regulator said that Deutsche Bank was the victim of an illegal scam and has since dealt with its related shortcomings.

The transactions under investigation include those involving trading in an account that was consistently involved in buy orders. In addition to the “mirror trades,” the investigation uncovered $4 billion of suspect trades that may have been conducted with another bank.

Deutsche Bank is looking at whether internal controls were used to deal with the mirror trades. Some trades in the buy orders were linked to the same accounts that were involved in the mirror trades. The lender already has said that it found violations involving its internal policies and control deficiencies.

Deutsche Bank raised its litigation reserves by $1.3B to cover possible litigation involving is operations in Russia. The bank recently shut down the bulk of its operation in Moscow.

Just in the past year, Deutsche Bank paid $258M to resolve a US probe in which it acknowledged it committed violations. It resolved British and U.S. probes into LIBOR rigging for $2.5 billion. A penalty or fine could also be impose by the U.S. Department of Justice in these latest investigations.

The SSEK Partners Group is an institutional investor fraud law firm.

Deutsche Bank Tally of Suspect Russia Trades at $10 Billion, Bloomberg, December 22, 2015

Deutsche Bank’s Suspect Russian Trades May Top $10 Billion, Fortune, December 22, 2015