Deutsche Bank is facing fines, legal action and possible prosecution of senior management over its role in a $20bn Russian money-laundering scheme, according to a confidential internal report seen by the Guardian. The bank admits there is a high risk that regulators in the US and UK will take significant disciplinary action against it, and concedes the scandal has hurt its global brand.
The scheme, known as the Global Laundromat, operated between 2010 and 2014, involving Russian criminals with links to the Kremlin and security services. Shell companies, typically based in the UK, loaned money to each other, then defaulted on fictitious debt. Corrupt judges in Moldova authenticated the debt, allowing billions to be transferred via a Latvian bank.
Deutsche Bank was used to launder the money through its correspondent banking network, funnelling illegal Russian payments to the US, EU and Asia. The bank was unaware of the scam until the Guardian and OCCRP broke the story in March 2017; the first it knew was an email from journalists asking for comment.
Internal investigators identified 1,244 high-risk entities in the US, 329 in the UK and 950 in Germany, responsible for nearly 700,000 transactions. The bank sent 149 suspicious activity reports to the UK's National Crime Agency and made similar disclosures to US authorities, reporting 30 clients, some of whom may have been unknowingly used.
The affair adds to Deutsche Bank's woes, following police raids over the Panama Papers, a plunging share price and merger talks. The bank is also under scrutiny in Washington over its lending to Donald Trump, who borrowed over $2bn from Deutsche over two decades.
