Russian branch of Credit Suisse reportedly investigates mirror trades
The internal investigation concerns two of the bank’s employees and a number of external financiers, according to Forbes.
Swiss bank Credit Suisse is allegedly conducting an internal probe into its Moscow office, with the investigation concerning mirror trades.
According to a report in the Russian edition of Forbes, citing sources in the bank, the probe has started not later than December 2016. Credit Suisse is investigating two of its own employees, engaged in treasury operations in the Russian office, as well as a number of external financiers, including the activities of a broker.
One of the counter-agents of Credit Suisse claims that the volume of deals investigated is up to tens of millions of dollars a day.
Credit Suisse has refused to comment (to “Forbes”) on the investigation of its employees.
The report comes less than a fortnight after regulators on both sides of the Atlantic sanctioned Deutsche Bank AG (ETR:DBK) for Russian mirror trades.
On January 30, 2017, the New York State Department of Financial Services (DFS) announced that Deutsche Bank and its New York branch will have to pay a $425 million fine and hire an independent monitor under a consent order entered into with the DFS.
The sanctions stemmed from findings that Deutsche Bank has violated New York anti-money laundering laws via a “mirror trading” scheme involving the bank’s Moscow, London and New York offices. As a result, $10 billion were laundered $10 billion out of the Russian Federation.
Operating through the equities desk at Deutsche Bank’s Moscow branch, a number of companies that were clients of the Moscow equities desk issued orders to buy Russian blue chip stocks, paying in Russian rubles. Shortly after that, a related counterparty would sell the identical Russian blue chip stock in the same quantity and at the same price through Deutsche Bank’s London branch. The counterparties involved were linked, whereas the trades were usually cleared through Deutsche Bank Trust Company of the Americas (DBTCA). The selling counterparty was typically registered offshore and would be paid for its shares in US dollars.
Today, FinanceFeeds received a statement from Credit Suisse, which stated the following: “We do not have any investigations into alleged mirror trading in the Moscow office,” counteracting what is stated on the report.
On January 31, 2017, the UK Financial Conduct Authority (FCA) imposed a fine of more than £163 million on Deutsche Bank over AML failures. The UK regulator accused the bank of failing to maintain adequate AML controls between January 1, 2012 and December 31, 2015. This is the severest financial penalty for AML controls failings ever imposed by the UK financial regulator.