Deutsche Bank among western institutions that
processed billions of dollars in cash of ‘criminal origin’ through Latvia
By Luke Harding and Nick
Hopkins
 |
|
A statue outside Deutsche
Bank in Frankfurt. Deutsche is Germany’s biggest
lender.
Photograph: Kai Pfaffenbach/Reuters
|
The German bank that loaned $300m (£260m) to
Donald Trump played a prominent role in a money laundering scandal run by
Russian criminals with ties to the Kremlin, the Guardian can reveal.
Deutsche Bank is one of dozens of western
financial institutions that processed at least $20bn – and possibly more – in
money of “criminal origin” from Russia.
The scheme, dubbed “the Global Laundromat”,
ran from 2010 to 2014.
Law enforcement agencies are investigating
how a group of politically well-connected Russians were able to use
UK-registered companies to launder billions of dollars in cash. The companies
made fictitious loans to each other, underwritten by Russian businesses.
The companies would default on these “debts”.
Judges in Moldova then made court rulings enforcing judgments against the
firms. This allowed Russian bank accounts to transfer huge sums to Moldova
legally. From there, the money went to accounts in Latvia with Trasta
Komercsbanka.
Deutsche, Germany’s biggest lender, acted as
a “correspondent bank” for Trasta until 2015. This meant Deutsche provided
dollar-dominated services to Trasta’s non-resident Russian clients. This
service was used to move money from Latvia to banks across the world.
During this period many Wall Street banks got
out of Latvia, citing concerns that the small Baltic country had become a
centre for international money laundering, especially from neighbouring Russia.
In 2013, and under US regulatory pressure, JP
Morgan Chase ceased providing dollar clearing services to the country.
From 2014, only two western lenders were
willing to accept international dollar transfers from Latvian banks. They were
Deutsche and Germany’s Commerzbank. Deutsche eventually withdrew correspondent
services to Trasta Bank in September 2015.
Six months later, Latvian regulators shut
down the bank. They cited repeated violations, and said the bank had failed to
deal with its money laundering risk.
Latvia’s deputy finance minister, Maija
Treija, said the money sent via Trasta was “either stolen or with criminal
origin”.
The defunct bank was being used as vehicle to
get money out of the ex-Soviet Union and “into the EU financial system”, she
added.
Deutsche said it had significantly
strengthened its systems and controls. It said that by the end of this year it
will have hired more than 1,000 new staff in its compliance and anti-financial
crime unit since 2015.
It added: “The bank has comprehensively
reviewed its client onboarding and know-your-client processes and where
necessary is exiting higher risk client relationships and markets.”
Commerzbank said it could not comment on its
relationships with other banks. It said it put a high value on compliance. It
said that suspicious transactions picked up during routine monitoring were
reported to the authorities.
Deutche Bank ended its relationship with
Trasta soon after Latvia’s regulator issued a warning, it is understood. In
August 2015, the Financial and Capital Markets Commission stopped all
transactions above €100,000.
Deutsche severed its relationship with the
other key Laundromat bank - Moldova’s Moldindconbank – in 2012.
Ties with Russia are a matter of acute
sensitivity for Deutsche. In February, it emerged that Deutsche had secretly
reviewed multiple loans made to President Trump by its private wealth division
to see if there was a connection to Russia. Trump owes Deutsche about $300m.
Deutsche refused to comment on its internal
review. Sources say the bank discovered no evidence of any Moscow link. That
covers other members of the US president’s family who are also Deutsche clients.
They include Trump’s daughter, Ivanka, her husband, Jared Kushner, and
Kushner’s mother, Seryl Stadtmauer.
In January, the UK and US imposed record
$630m fines on Deutsche for its role in another money laundering scam run out
of its Moscow office. The bank failed to prevent $10bn of Russian money being
laundered in a complex “mirror trades” operation. The wealthy Russians that
used the scheme have not been identified.
Deutsche’s Private Bank – the division that
lends to Trump – appears in the Global Laundromat scheme. Sources suggest that
many of its clients are rich Russians, typically with personal assets of
$50m-plus. According to Germany’s Süddeutsche Zeitung, Deutsche processed more
than $24m of Laundromat cash in 209 transactions.
Records obtained by the Organised Crime and
Corruption Project (OCCRP) and Novaya Gazeta from anonymous sources show how
the money was spent. Much of it vanished into opaque offshore companies. Some
of it went on luxury items including diamonds, leather jackets, and home-cinema
equipment.
One of Deutsche’s high net worth customers
blew €500,000 at Mahlberg, a German jewellery firm. The payment in January 2013
was made by Seabon Limited, a Laundromat company registered in Tooley Street,
London. More than $9bn was funnelled via Seabon, records show.
Almost €1m went to a Munich electronics firm,
Rohde & Schwarz, which produces surveillance technology for security
services and police.
Often, the explanation for high-volume
payments was fake. The money spent on watches was marked down on the bank wire
transfer as a payment for “computer equipment”.
Another $500,000 payment was made to a London
fur broker, Gideon Bartfeld. Bartfeld said the money had arrived from Deutsche
Bank New York, before being sent on to the Bank of New York Mellon, which paid
the invoice. Trasta – the bank that first sent the money to Deutsche – did not
appear in any paperwork, he added.
Bartfeld said the payment came via two
“highly reputable and respected” global banks. He said: “Consequently, we
received this payment in full confidence [as they] were satisfied that the
payment met their rigorous due diligence and compliance requirements.”
The fur trader said he had known many of his
Russian clients for years. His main markets were Russia and China, he added.
There is no suggestion that Bartfeld or Mahlberg or Rohde & Schwarz were
involved in wrongdoing.
