Some warnings were ignored. Others were dismissed.
Red flags started popping up inside Deutsche Bank in early 2014 about billions of dollars in suspect trades from Moscow. A Cypriot bank sent a query to London. Russia’s central bank raised questions. Moscow back-office staffers compiled a list of dubious transactions.
Bloomberg News reports that some of the warnings were ignored. Others were dismissed. It wasn’t until early 2015, when Russian authorities began interviewing bank employees in Moscow, that top executives in Frankfurt were alerted and the bank began a full-scale internal investigation.
What Deutsche Bank quickly found: a “systemic” failure in internal controls meant to prevent money laundering and financial crime. Those critical deficiencies, as it called them, allowed a “suspected money-laundering pattern” to pump as much as $10bn out of Russia from 2012 through 2014.
That is the harsh conclusion of an internal bank report analyzing the lender’s response to the so-called mirror trades, details of which were reviewed by Bloomberg News. Findings from the October 2015 report form the basis for this article, alongside details from a Russian central bank audit of the bank’s operations that resulted last year in a fine for reporting lapses.
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