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A new data leak shows that all security systems have failed in money laundering transactions in Russia within Deutsche Bank. CEO Sewing is also under pressure.
By Petra Blum, WDR
At the beginning of 2017, Deutsche Bank paid more than 600 million US dollars to the authorities of the US and Great Britain as part of an agreement following the exposure of so-called mirror operations, a system with which between 2011 and 2015 thousands Out of millions from Russia and other countries the former Soviet Union smuggled into the Western financial system by buying and selling shares. To do this, he buys shares in rubles and resells them in dollars on the same day. Mirror exchanges don’t have to be illegal, but they are often used to get money out of the country or to launder.
Investigating authorities in Great Britain and the United States took on $ 10 billion of doubtful transactions that came out of Eastern Europe, with the active help of Deutsche Bank, especially at its locations in Moscow and London. “Greed and corruption,” the US authorities said in their final report, had fueled this system at Deutsche Bank.
Suspicions of money laundering are never invalidated
Even if they only accused the bank of default, the bank could never refute the suspicion that it had been money laundering. Instead, they promised in Frankfurt that they would clean up from now on to control money laundering risks that have become apparent.
Secret documents inside the bank now show how deep the structural problems of the largest Deutsche Bank were, which not only fueled the Mirror Trade scandal, but also meant that the bank might not eliminate the problem as quickly as one had promised to the bank. public. They show that the bank internally suspected that the suspect sums in the Mirror Trade scandal could have been higher, to the most serious extent.
Mirror operations even after a fine
There was talk of up to US $ 16 billion and deals that should have started in 2001. And the documents suggest another suspicion: Even after the fine of hundreds of millions in 2017, the infamous mirror exchanges could have continued. At least that is the result of the reports of alleged money laundering that were leaked to the news portal “Buzzfeed” and, as part of an international cooperation, also of NDR, WDR and “Süddeutscher Zeitung” were evaluated.
What the documents reveal does not fit at all into the “culture change” narrative that Deutsche Bank had proclaimed, because they show that the bank itself suspected that individual mirror business clients, even after the scandal had been discovered, continued until 2017 and traded doubtful funds for clean US dollars through exchange deals, even through Deutsche Bank.
Deutsche Bank sees itself as a victim
Deutsche Bank says the issues affecting it date back to before 2016. They were “criminal acts by individuals,” they learned from mistakes, systematically addressed issues, realigned businesses, and improved controls. as well as personal consequences. Furthermore, the number of internal inspectors has increased tremendously since 2015, from 600 to 1,500 employees.
Deutsche Bank did not comment on the secret documents showing that the bank itself still sent Mirror Trades suspicious transaction reports to US authorities in 2017. Talking about suspicious transaction reports can be a crime for a bank.
Former employee established a shady fund
The message is interesting. The suspicious client: a Russian investment fund. Deutsche Bank employees in the US quickly identified the owner. That shouldn’t have been difficult because he and Deutsche Bank are old friends – not only is he the founder of the mutual fund, but he was also an employee of Deutsche Bank in Moscow.
And that’s not all: on the fund’s website, four out of a total of six investment bankers declared that they once worked for Deutsche Bank in Moscow. In total, Deutsche Bank internally determined that the companies belonging to that mutual fund had transferred more than five billion US dollars between 2013 and the end of 2016, which it suspected were mirror operations.
Deutsche Bank notes that the investigating authorities of Great Britain and the US found in the results of their investigation “that the bank has invested considerable resources to improve its money laundering controls”. There is also recognition from the authorities for “what the bank has already done in this area” and how “cooperative” the bank has worked with the authorities. That also influenced the amount of the fine in the end.
Have the measures been delayed and abolished?
The internal banking investigation documents paint a devastating picture of the Group’s own money laundering controls before the mirror trades were discovered. There is talk of delaying internal recognition. On the fact that no action was taken when suspicions against Mirror Trade clients had already been confirmed.
A statement made in 2015 by high-ranking compliance employees at Deutsche Bank is particularly heavy: it could all have happened because there was fraudulent consent between employees of the Moscow branch and suspicious customers in Russia. There is talk of attempted bribery and that apparently it was considered normal in the Moscow branch to do things to the limit of what is allowed. Deutsche Bank does not comment on this.
Testimony from a witness who was employed by Deutsche Bank in Russia until 2010 and who testified in support of a class action lawsuit against Deutsche Bank supports the bank’s internal investigation. The compliance employees at the Moscow location were hardly considered better than the caretaker. The so-called “Know your customer”, that is, a control of customers and their money, practically did not exist, you just had to do business, and in Russia that is simply such that you believe that you have to break the rules to make decent profits. .
“I would have taken everyone as clients”
He didn’t always know the customers and he didn’t always want to know who they were or where the money was coming from. “If you want to know exactly, our employees would have taken everyone as customers, even the incarnate if it had to be,” said the witness. Mirror trades would also have spread over a significantly longer period of time; executives at the bank’s management level should have seen it too. Deutsche Bank does not comment on the allegations, but has since pulled out of the investment business in Russia. The class action was dismissed.
From the bank’s internal documents it is clear: there was obviously a culture of looking the other way throughout the group, which eventually led to the Moscow branch getting completely out of control, to the fact that compliance and all the rest Controls failed there, as was the last one. The supervisory authority is the internal audit department, which is supposed to uncover such wrongdoing when everyone else does not. Since mid-2013, Christian Sewing, the current director of Deutsche Bank, was in charge of this internal audit. The sewing department reviewed the Russian business several times, but mirror exchanges were not discovered.
Wasn’t he looking closely enough? Even when Russia’s central bank warned Deutsche Bank in 2014 that individual mirror trade clients could be involved in money laundering, internal auditors gave investment banking the green light in Russia, a sign that basically everything was up. in order. . How can it be? Deutsche Bank announced that Christian Sewing had never seen or even signed the results of these tests. You first read the report when it became clear in May 2015 that there might have been shortcomings in this audit.
