Deutsche Bank in money laundering probe

23 December 2015 9:46 am

Deutsche Bank, like that other big German firm Volkswagen, has a grubby track record.

Now it’s been implicated in $10 billion of trades in Russia that may not have been vetted for money laundering as clients moved money out of the country.

According to the Financial Times, these trades involved clients buying Russian shares for roubles in Moscow and simultaneously selling them in London, usually for dollars.

Close associates of President Vladimir Putin, including a relative and his longtime friends, billionaire Arkady Rotenberg and his brother Boris, could benefit from the “mirror” trades, according to Bloomberg.

All up, these sorts of trades can be used to skirt international banking rules on reporting large international movements of money. What makes it even more complicated is that these deals were going on when there were sanctions on Russia over the events in the Ukraine.

That raises the likelihood of another substantial fine for Germany’s largest bank as it struggles to come to terms with a decade of lax governance that has embroiled it in scandals from mortgage-securities fraud to rigging benchmark interest rates.

And Deutsche Bank in its arrogance is not prepared for the penalties that will flow from this. Reuters quotes sources saying Deutsche has for now put less than 1 billion euros aside for the issue. "But the case has the potential of becoming as big as Libor," the source said.

Deutsche Bank was one of the first big western banks to expand in Russia after the fall of Communism. It has built up a formidable business dealing with the generation of super-wealthy individuals that emerged from the opening up of the country's economy.

All that is now coming unstuck.