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Deutsche Bank fined over Russian money laundering scheme

The U.K. Financial Conduct Authority and the New York Department of Financial Services fined Deutsche Bank AG for failings in money laundering controls that purportedly allowed certain customers to launder roughly $10 billion out of Russia.

The U.K. FCA said Jan. 31 that it fined the German lender £163 million, the largest financial penalty that it or predecessor Financial Services Authority has ever levied for anti-money laundering controls failings.

The New York regulator, meanwhile, said late Jan. 30 that Deutsche Bank and its New York branch will pay a $425 million fine. The regulator said bank missed opportunities to identify and stop a mirror trading scheme involving its offices in Moscow, New York and London, adding that the bank's "extensive compliance failures" allowed the fraud to go on for years.

The investigation suggests that the bank's compliance operations were understaffed and underfunded, according to New York agency. One senior compliance officer "repeatedly" stated that he had to "beg, borrow and steal" to obtain the resources needed to ensure compliance, and that individual staff members often needed to do multiple jobs at once, DFS said. At one point, the roles of head of AML compliance, head of legal and AML officer for the Moscow branch were all filled by one person, a lawyer with no compliance background.

Deutsche Bank will hire an independent monitor, who will oversee a comprehensive review of the bank's compliance operations, according to the consent order.

DFS coordinated with the U.K. FCA in investigating the matter.