U.S. watchdogs are widening their investigation into Deutsche Bank AG after it emerged that money laundering at the bank’s Moscow division could be linked to potential sanctions violations, sources told the Financial Times. The investigation is one of the first by U.S. regulators into a likely breach of Western sanctions against Russia, which were triggered by the country’s 2014 Crimea annexation, the newspaper reported Sunday.
The U.S. Department of Justice and New York’s Department of Financial Services are widening the probe involving $6 billion worth of trades because certain transactions allegedly involved U.S. dollars and a former American banker, according to the Financial Times. The investigation also centered on "mirror trades" that allow the bank's Russian clients to move funds out of the country without properly notifying officials, the daily reported.
At the center of the U.S. inquiry lies former Deutsche Bank trader Tim Wiswell, a U.S. citizen, who lost his job amid investigations into mirror trades. U.S. authorities are now investigating if Wiswell’s alleged involvement reflected a wider system that had been approved by bank executives, the Financial Times reported. They are also reportedly examining if the bank had proper compliance programs in connection with Russian sanctions and provided correct information to the regulators.
The Russian clients of the bank facing U.S. sanctions include brothers Arkady and Boris Rotenberg, close associates of Russian President Vladimir Putin, the report added.
The German lender had launched an internal investigation into Russian securities trades in June. "Deutsche Bank has taken disciplinary measures with regards to certain individuals in this matter and will continue to do so with respect to others, as warranted," the newspaper reported, quoting the bank.