Save, make, understand money


Deutsche Bank receives record £163m fine over Russian money transfers

Samantha Partington
Written By:
Samantha Partington

Deutsche Bank has been fined more than £163m by the Financial Conduct Authority for failing to prevent $10bn being transferred from Russia to offshore accounts, in a suspected act of financial crime.

The regulator issued the bank with its largest-ever penalty for anti-money laundering (AML) failings for exposing the UK financial system to the risks of crime, by not overseeing the formation of new customer and global relationships.

Mark Steward, director of enforcement and market oversight at the FCA, said: “The size of the fine reflects the seriousness of Deutsche Bank’s failings. We have repeatedly told firms how to comply with our AML requirements and the failings of Deutsche Bank are simply unacceptable. Other firms should take notice of today’s fine and look again at their own AML procedures to ensure they do not face similar action.”

The period during which the bank was vulnerable to financial crime spanned four years from 1 January 2012 to 31 December 2015. During this period Deutsche Bank’s corporate banking and securities division in the UK was found to have:

  • performed inadequate customer due diligence
  • failed to ensure that its front office took responsibility for the division’s Know Your Customer obligations
  • used flawed customer and country risk rating methodologies
  • had deficient AML policies and procedures
  • had an inadequate AML IT infrastructure
  • lacked automated AML systems for detecting suspicious trades
  • failed to provide adequate oversight of trades booked in the UK by traders in non-UK jurisdictions.

The FCA found the bank in breach of Principle 3 of its Principles of Business which involves taking reasonable steps to organise its affairs responsibly and effectively, with adequate risk management systems. Deutsche Bank also breached Senior Management Arrangements, Systems and Controls (SYSC) rules 6.1.1 R and 6.3.1 R.

Deutsche Bank agreed to settle at an early stage of the FCA’s investigation which qualified it for for a 30% discount. This discount does not apply to the £9.1m in commission that Deutsche Bank generated from the suspicious trading, which has been confiscated as part of the overall penalty to ensure the bank received no financial benefit from the breach.

The firm must also pay the New York State Department of Financial Services $425m and must agree to use an independent monitoring firm for up to two years.