US probes Deutsche Bank over Moscow deals

The US Department of Justice is investigating Deutsche Bank over suspicions the bank helped wealthy Russian businessmen close to President Vladimir Putin get their money out of Moscow.

US probes Deutsche Bank over Moscow deals
Photo: DPA

Bloomberg reports that Germany's biggest bank could have masked as much as $6 billion in transactions which disguised the fact that Russians suffering under US sanctions were furrowing their money into more stable financial markets.

In the so-called mirror trades, Russian businessmen may have bought securities in rubles in Deutsche Bank's Moscow office before selling identical ones in a foreign currency through the London office.

The bank is also conducting an internal review of the transactions, and Bloomberg reports that close associates of Russian President Vladimir Putin were involved in the money flows.

The transactions are said to involve Arkady and Boris Rotenberg, close friends of Putin who got rich on state-owned firms which were sanctioned by the US after Russia annexed Crimea from Ukraine in 2014.

The trades under review took place between 2011 and 2015, Bloomberg reports.

US investigators are looking into whether Deutsche Bank complied with US anti-money laundering laws.

This is just the latest investigation in what has become something of an annus horribilis for the German lender.

In the US the bank is being investigated as part of at least three other criminal investigations, while globally it is mired in as many as 6,000 further litigation cases.

Meanwhile in April it reached and agreement with UK and US authorities to pay a $2.5 billion over manipulating of the Libor rate.

Falling profits also led to the unexpected resignation of co-CEOs Anshu Jain and Jürgen Fitschen in June.

Earlier in October Deutsche Bank issued a warning that it would post losses of €6.2 billion for the third quarter.

The bank also recently downsized its Moscow operations “in order to reduce complexity, costs, risks, and capital consumption.”

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German online bank N26 shutters US service

German online bank N26 said Thursday it was closing its operation in the United States next year, as regulators in Europe place the "fintech" start-up under increased scrutiny.

The N26 logo on a bank card.
The N26 logo on a bank card. Photo: picture alliance/dpa | Christophe Gateau

N26’s 500,000 customers in the US would be able to use their services until January 11th, 2022, the bank said in a statement, after which it would cease to operate in a market it first entered in 2019.

Instead the Berlin-based operation would “sharpen its focus on its European business”, where it already operates in 24 countries and is exploring expansion into more eastern European markets.

N26 said it would also look to launch new “investment products in the coming year” to sit along side its current account service.

Founded in 2013, N26 offers free, online-only banking services to around seven million clients and is one of Germany’s most high-profile financial technology or “fintech” firms.

In October, the bank raised $900 million from private investors, and announced a plan to hire a further 1,000 employees to reinforce its product development, technology and cybersecurity teams.

READ ALSO: German online bank N26 to create 1,000 jobs

At home, N26 has been in the crosshairs of the German banking watchdog BaFin since 2018 after a local news media investigation found that it was possible to open account with forged IDs.

Earlier in the month, the regulator said it was upping its oversight operations at N26, appointing a special representative to monitor the bank’s progress towards solving issues in “risk management with regard to IT and outsourcing” identified by BaFin.

The regulator also limited the number of new customers N26 could take on to 50,000 a month until the shortcomings were addressed.

N26 was already being monitored by BaFin over failures in the start-up’s anti-money laundering system.

BaFin issued N26 with a 4.25-million-euro ($4.8-million) penalty earlier this year in connection with around 50 “suspicious transactions” the bank failed to report promptly enough.