Deutsche Bank faces action over $20bn Russian money-laundering scheme

Posted on Wednesday, 17th April 2019 @ 03:33 PM by Text Size A | A | A

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Germany’s troubled Deutsche Bank faces fines, legal action and the possible prosecution of “senior management” because of its role in a $20bn Russian money-laundering scheme, a confidential internal report seen by the Guardian says.

The bank admits there is a high risk that regulators in the US and UK will take “significant disciplinary action” against it. Deutsche concedes that the scandal has hurt its “global brand” – and is likely to cause “client attrition”, loss of investor confidence and a decline in its market value.

Deutsche Bank was embroiled in a vast money-laundering operation, dubbed the Global Laundromat. Russian criminals with links to the Kremlin and the KGB used the scheme between 2010 and 2014 to move money into the western financial system. The cash involved could total $80bn, detectives believe.

Shell companies typically based in the UK “loaned” money to each other. Companies then defaulted on this large fictitious debt. Corrupt judges in Moldova authenticated the debt – with billions transferred to Moldova and the Baltics via a bank in Latvia.

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This ought to win Deutsche Bank some badly needed good will with global prosecutors investigating the bank for its involvement in various financial frauds – not to mention Financial Services Committee Chairwoman Maxine Waters.According to a Bloomberg report on Friday, DB has decided – apparently with the blessing of a federally appointed monitor – that it won’t pay out the $4 billion balance on its commitment to help distressed homeowners impacted by the housing collapse. The bank had agreed to spend billions of dollars on consumer relief during the waning days of the Obama administration as part of a massive settlement with the DOJ over its role in selling mortgages.

“Deutsche Bank (DB) poses as what is called a ‘National Champion’ bank and the largest bank by far in Germany, but it’s actually the largest criminal enterprise in Germany. This is quite a statement because VW is such a massive fraud…

Federal police on Thursday raided the Frankfurt offices of Deutsche Bank. The Frankfurt prosecutor’s office said the raids stemmed from an investigation into suspected money laundering at the German bank. About 170 law enforcement agents took part in the operation. The investigation revolves around multiple Deutsche Bank employees, including two believed to still be working at the financial institution. 

Just when Deutsche Bank probably thought the worst of its legal troubles (over the Libor scandal, sales of shoddy mortgage-backed securities, FX and precious metal rigging which collective resulted in tens of billions in legal fines) were behind it, the struggling German lender is being drawn deeper into the biggest money laundering scandal in European history.

Amid an ongoing investigation in Australian banks, insurers, financial service providers and pensions funds for everything from rate-rigging to mistreating customers and questionable consumer lending practices, two major global banks are now facing criminal charges in the country. Prosecutors are now expected to lays “criminal cartel” charges against Citigroup, Deutsche Bank and the Australian bank (ANZ) over a $1.9-billion share of ANZ’s stock, according to the Australian Competition & Consumer Commission (ACCC)

Just a week after ‘the purge’ began , Deutsche Bank is closing its office in Houston as part of a strategy to pare its U.S. operations , according to an internal memo seen by Bloomberg.

Back in the summer of 2015, Deutsche Bank mistakenly paid $6 billion to a hedge fund client in a “fat finger” trade on its foreign exchange desk . The embarrassed bank recovered the money from the US hedge fund the next day, and quickly accused a junior member of the bank’s forex sales team of being responsible for the transfer while his boss was on holiday; as the bank further explained, instead of processing a net value, the person processed a gross figure: “That meant the trade had too many zeroes” a staffer helpfully explained. Fast forward to today when Germany’s largest bank has done it again.

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