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FINANCE

Deutsche Bank handed $630m fine over Russian money laundering

New York and British authorities on Monday slapped nearly $630 million in fines on German banking giant Deutsche Bank over alleged money laundering in Russia, New York State's Department of Financial Services announced.

Deutsche Bank handed $630m fine over Russian money laundering
Photo: DPA

The scheme illegally moved $10 billion out of Russia, using so-called mirror trades among the bank's Moscow, London and New York offices, authorities said. The US Justice Department also is investigating the matter.

The fines were the latest development in the string of legal woes for the German banking giant, coming less than two weeks after the bank finalized a $7.2 billion settlement with the US Justice Department over its role in the 2008 global financial crisis.

The New York authorities said in a statement they were joined by Britain's Financial Conduct Authority in penalizing the bank after finding pervasive weaknesses in Deutsche Bank's internal safeguards for money laundering and client risk.

DFS fined the bank $425 million, while FCA's fine was 163 million pounds, or about $204 million.

“This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade,” DFS Superintendent Maria Vullo said in the statement.

Bank units tasked with legal compliance and preventing money laundering were understaffed and ineffective, the DFS said.

In “mirror” trades, clients would purchase stocks in rubles in Moscow while other clients who were related or even had the same owner would sell the same stock at the same price through the bank's London branch.

“By converting rubles into dollars through security trades that had no discernible economic purpose, the scheme was a means for bad actors within a financial institution to achieve improper ends while evading compliance with applicable laws,” according to the legal document detailing the settlement with DFS.

In addition to paying the fines, Deutsche Bank also will be required to hire an outside monitor to review its internal compliance measures.

RUSSIA

Germany arrests Russian scientist for spying for Moscow

German police arrested a Russian scientist working at an unidentified university, accusing him of spying for Moscow, prosecutors said on Monday, in a case that risks further inflaming bilateral tensions.

Germany arrests Russian scientist for spying for Moscow
Vladimir Putin. Photo: dpa/AP | Patrick Semansky

Federal prosecutors said in a statement that the suspect, identified only as Ilnur N., had been taken into custody on Friday on suspicion of “working for a Russian secret service since early October 2020 at the latest”.

Ilnur N. was employed until the time of his arrest as a research assistant for a natural sciences and technology department at the unnamed German university.

German investigators believe he met at least three times with a member of Russian intelligence between October 2020 and this month. On two occasions he allegedly “passed on information from the university’s domain”.

He is suspected of accepting cash in exchange for his services.

German authorities searched his home and workplace in the course of the arrest.

The suspect appeared before a judge on Saturday who remanded him in custody.

‘Completely unacceptable’

Neither the German nor the Russian government made any immediate comment on the case.

However Moscow is at loggerheads with a number of Western capitals after a Russian troop build-up on Ukraine’s borders and a series of espionage scandals that have resulted in diplomatic expulsions.

Italy this month said it had created a national cybersecurity agency following warnings by Prime Minister Mario Draghi that Europe needed to
protect itself from Russian “interference”. 

The move came after an Italian navy captain was caught red-handed by police while selling confidential military documents leaked from his computer to a Russian embassy official.

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The leaders of nine eastern European nations last month condemned what they termed Russian “aggressive acts” citing operations in Ukraine and “sabotage” allegedly targeted at the Czech Republic.

Several central and eastern European countries have expelled Russian diplomats in solidarity with Prague but Russia has branded accusations of its involvement as “absurd” and responded with tit-for-tat expulsions.

The latest espionage case also comes at a time of highly strained relations between Russia and Germany on a number of fronts including the ongoing detention of Kremlin critic Alexei Navalny, who received treatment in Berlin after a near-fatal poisoning.

Chancellor Angela Merkel’s government has moreover worked to maintain a sanctions regime over Moscow’s annexation of the Crimean peninsula, the scene of ongoing fighting between pro-Russia separatists and local forces.

And Germany has repeatedly accused Russia of cyberattacks on its soil.

The most high-profile incident blamed on Russian hackers to date was a cyberattack in 2015 that completely paralysed the computer network of the Bundestag lower house of parliament, forcing the entire institution offline for days while it was fixed.

German prosecutors in February filed espionage charges against a German man suspected of having passed the floor plans of parliament to Russian secret services in 2017.

Foreign Minister Heiko Maas last week said Germany was expecting to be the target of Russian disinformation in the run-up to its general election in September, calling it “completely unacceptable”.

Russia denies being behind such activities.

Despite international criticism, Berlin has forged ahead with plans to finish the Nord Stream 2 pipeline, set to double natural gas supplies from Russia to Germany.

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