DB fined after $10 billion seeps through money laundering controls

FCA issues largest ever fine for anti-money laundering after Deutsche Bank fails to prevent billions being transferred out of Russia.
By John Bakie

Deutsche Bank has been fined £163 million for failings in its anti-money laundering controls that enabled $10 billion of suspected fraudulent transactions to be passed to offshore bank accounts.

The fine was levied by the UK’s Financial Conduct Authority (FCA) for its failure to maintain adequate anti-money laundering (AML) controls between 1 January 2012 and 31 December 2015 and is the largest fine ever issues for AML failings by the regulator.

The FCA said that as a result of Deutsche Banks inadequate approach to AML, the bank’s Russian subsidiary, DB Moscow, was used by the unidentified customers to transfer some $10 billion of unknown origin from Russia to offshore bank accounts in a way that was highly suggestive of financial crime.

The suspected fraud was carried out through the execution of more than 2,400 mirror trades from 2012 to 2014. The trades were used to transfer cash from Russia, through Deutshe Bank’s UK operations and into bank accounts in countries such as Cyprus, Estonia and Latvia.

Deutsche Bank agreed to settle the case at an early stage with the FCA and received a 30% reduction in its fine, which would have been £229 million. The FCA also noted the bank cooperated with its investigatopn and committed resources to remediation and correcting the deficiencies in its AML controls.

Mark Steward, director of enforcement and market oversight at the FCA, said: “The size of the fine reflects the seriousness of Deutsche Bank’s failings. We have repeatedly told firms how to comply with our AML requirements and the failings of Deutsche Bank are simply unacceptable. Other firms should take notice of today’s fine and look again at their own AML procedures to ensure they do not face similar action.”