The following is an excerpt from Karen Freifeld and Arno Schuetze | January 30, 2017 | reuters.com |
Deutsche Bank AG (DBKGn.DE) has agreed to pay $425 million to New York's banking regulator over a "mirror trading" scheme that moved $10 billion out of Russia between 2011 and 2015, the regulator said on Monday.
In addition, Britain's Financial Conduct Authority is about to penalize the bank roughly $200 million for the suspicious trades, a person familiar with the matter said.
The scheme involved clients buying stocks in Moscow in rubles and related parties selling the same stocks shortly thereafter through the bank's London branch, the New York Department of Financial Services (DFS) said in a statement.
The trade of a Russian blue chip stock, typically valued at between $2 million to $3 million an order, was cleared through the bank's New York operations, with the sellers typically paid in U.S. dollars, DFS said.
The regulator, which licenses and supervises the New York branch, found the bank conducted its business in an unsafe and unsound manner in violation of state banking law.
Though the trades appeared to have no legitimate economic purpose, Deutsche's deficient anti-money laundering controls and know-your-customer policies did not detect and stop the scheme for years, DFS superintendent Maria Vullo said.
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