Bank To Settle NYDFS Charges Of "Mirror-Trading Scheme"

Deutsche Bank AG ("DB") agreed to pay a $425 million fine and hire an independent compliance monitor to settle New York Department of Financial Services ("NYDFS") money laundering charges. The NYDFS alleged that the bank had failed to detect a long-running "mirror-trading" scheme in which clients in Russia moved $10 billion through London and New York. According to the NYDFS Consent Order, the suspicious transactions, which were made using over a dozen legal entities in offshore territories, were facilitated by traders in a DB Moscow affiliate who generated large fees while effectively operating with no management supervision or compliance review.

The scheme involved clients of the DB Moscow affiliate desk routinely purchasing "Russian blue chip stocks, always paying in rubles." The Consent Order stated that a related counterparty would sell the identical Russian blue chip stocks in the same quantity and price through the DB London branch, making the counterparties