The German bank has been hit with a $629 million penalty in the US and UK
February 1, 2017: Germany’s Deutsche Bank has been hit with a $629 million penalty in the US and UK over a $10 billion money laundering scheme that involved its branches in Moscow, New York and London.
The UK Financial Conduct Authority ordered a $204 million fine on January 31 hours after New York’s Department of Financial Services fined the bank $425 million for failures over the so-called “mirror-trades”. The US Justice Department is investigating the trades, which were used to convert rubbles into dollars and transfer the money out of Russia.
“The bank missed numerous opportunities to detect, investigate and stop the scheme due to extensive compliance failures, allowing the scheme to continue for years,” the New York Department of Financial Services said in a statement.
This penalty follows a $7.2 billion settlement Deutsche Bank reached with the US Department of Justice in December over toxic mortgage assets. The German lender admitted in a 71-page statement of facts that it made “false representations” to mortgage bond investors and omitted material information.
The bank agreed to pay $7.2 billion and admitted to misleading investors. It will pay a $3.1 billion civil penalty and provide $4.1 billion in relief to homeowners.
Deutsche Bank is expected to tap current legal reserves to pay the US fine, potentially reducing pre-tax profits.