18 Apr 2019
Deutsche Bank “very likely” processed illicit transactions linked to a massive Russian money laundering network that the lender was unaware of until media reports of it surfaced, a leaked audit report concluded last year.
The “strictly confidential” report by the bank’s supervisory board audit committee determined that the institution’s ties to the so-called “Russian Laundromat” posed “high” risks, including potential monetary settlements, related litigation, client attrition and prosecutions of individual executives linked to the scheme.
The Organized Crime and Corruption Reporting Project (OCCRP) said in 2017 that Deutsche Bank appears to processed $24 million in transactions linked to a money laundering network that involved 19 Russian banks and the alleged transfer of nearly $21 billion in suspicious funds from 2011 through 2014.
“Until publication of intelligence on the OCCRP website in March 2017, Deutsche Bank was not aware of the money laundering scheme,” according to the 2018 audit report, which were obtained and first reported on by The Guardian.
The scheme typically worked through the documentation of nonexistent loan “debt” between two complicit UK-based shell companies that claimed that the “loan” in question had been “guaranteed” by Moldovan proxies of a Russian business.
Claiming default on a loan that had never been made, the UK “lender” would obtain a ruling from a complicit Moldovan judge ordering the Russian firm to transfer real money into a court-controlled account, effectively laundering the Russian funds as a debt repayment, according to OCCRP and other media outlets.
In response to the 2017 OCCRP report and queries from The Guardian earlier that month, Deutsche Bank launched an internal review of nearly 3,900 entities potentially tied to the money laundering network, the leaked audit said. The bank subsequently determined that just under 2,500 of the entities posed high or medium compliance risks, the committee said.
As of 16 March 2018, Deutsche Bank had filed 196 suspicious activity reports (SARs) related to the then-incomplete probes. Of that total, 149 SARs involved 329 “high-risk” entities in the United Kingdom that had been involved in the transfer of £62 million, the audit said.
In a statement to The Guardian, Deutsche Bank declined to comment on “potential or ongoing investigations,” but noted it had “considerably increased staff numbers in anti-financial crime” since 2015 and invested €700 million in upgrading “key control functions” since 2016.
You can claim CPD minutes for this content, by signing up to our CPD WalletFREE CPD Wallet