At the heart of the matter were trades that involved Russian clients buying securities in roubles through Deutsche’s Moscow office and then selling identical ones for foreign currency, including US dollars, through the bank’s London office. The trades had no economic purpose, regulators allege, and could be used to launder money. Several of the sellers, which were based offshore in Cyprus or the British Virgin Islands, were paid in US dollars that were routed through Deutsche’s New York office.
According to the DFS consent order, Deutsche officials saw the first of several red flags in 2011 when a trade with one of the counterparties to the alleged scheme failed to settle because that counterparty’s licence to operate had been suspended by Russian regulators. Other red flags followed, the DFS alleged.
The German lender was asked in 2014 by the Bank of Russia, the country’s central bank, about the trades of some Russian clients and subsequently began an investigation into transactions carried out over a four-year period ending in early 2015.