Deutsche Bank settles New York probe with $425m fine

 
Helen Cahill
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The regulator found Deutsche Bank conducted its business in an unsafe manner (Source: Getty)

Shares in Deutsche Bank rose after it agreed to a $425m (£340m) fine to New York's banking regulator over a trading scheme that moved $10bn out of Russia between 2011 and 2015.

The bank's shares rose 2.2 per cent to €19.02 in late morning trading.

The "mirror trading" scheme allowed clients to buy stocks in Moscow in rubles and sell them through Deutsche Bank's London branch via related parties.

Read more: Deutsche Bank forecast to be in the red for 2016

The New York Department of Financial Services (DFS) said the trade of a Russian blue chip stock was cleared through Deutsche Bank's New York operations, and the sellers were generally paid in US dollars.

The DFS found the bank violated state banking law by conducting its business in an unsafe manner. Deutsche Bank will now be forced to have an independent party monitor its compliance.

Read more: Deutsche Bank slashes bonuses for a quarter of its staff

Financial services superintendent Maria T. Vullo said: "In today's interconnected financial network, global financial institutions must be ever vigilant in the war against money laundering and other activities that can contribute to cybercrime and international terrorism.

"This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and widespread compliance issues dating back a decade. The offsetting trades here lacked economic purpose and could have been used to facilitate money laundering or enable other illicit conduct, and today’s action sends a clear message that DFS will not tolerate such conduct."

Deutsche has also been fined by the City watchdog over the same trades. The lender agreed to a £163m settlement with the Financial Conduct Authority.

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