The bank, beset by scandals and mismanagement, is in a precarious state. Volkov would speak to a sales trader—often, a young woman named Dina Maksutova—and ask her to place two trades simultaneously. In one, he would use Russian rubles to buy a blue-chip Russian stock, such as Lukoil, for a Russian company that he represented.

In the second trade, Volkov—acting on behalf of a different company, which typically was registered in an offshore territory, such as the British Virgin Islands—would sell the same Russian stock, in the same quantity, in London, in exchange for dollars, pounds, or euros. Both the Russian company and the offshore company had the same owner. Deutsche Bank was helping the client to buy and sell to himself.

At first glance, the trades appeared banal, even pointless. Deutsche Bank earned a small commission for executing the buy and sell orders, but in financial terms the clients finished roughly where they began. To inspect the trades individually, however, was like standing too close to an Impressionist painting—you saw the brushstrokes and missed the lilies.

These transactions had nothing to do with pursuing profit. They were a way to expatriate money. Because the Russian company and the offshore company both belonged to the same owner, these ordinary-seeming trades had an alchemical purpose: On the Moscow markets, this sleight of hand had a nickname: Mirror trades are not inherently illegal.

The purpose of an equities desk at an investment bank is to help approved clients buy and sell stock, and there could be legitimate reasons for making a simultaneous trade. A client might want to benefit, say, from the difference between the local and the foreign price of a stock. Fourteen former and current employees of Deutsche Bank in Moscow spoke to me about the mirror trades, as did several people involved with the clients. Most of them asked not to be named, either because they had signed nondisclosure agreements or because they still work in banking.

Viewed with detachment, however, repeated mirror trades suggest a sustained plot to shift and hide money of possibly dubious origin.

Exclusive: Deutsche Bank suspends currency trader

Department of Justice, the New York State Department of Financial Services, and financial regulators in the U. In an internal report, Deutsche Bank has admitted that, until April, , when three members of its Russian equities desk were suspended for their role in the mirror trades, about ten billion dollars was spirited out of Russia through the scheme.

The lingering question is whose money was moved, and why. Deutsche Bank is an unwieldy institution with headquarters in Frankfurt and about a hundred thousand employees in seventy countries. When it was founded, in , its stated purpose was to facilitate trade between Germany and other countries.

It soon established footholds in Shanghai, London, and Buenos Aires. In , the bank arrived in Russia, financing railways commissioned by Alexander III. It has operated there ever since. After the deregulation of the U. The assimilation of different banking cultures was not always successful. But as it grew fast it also grew loose.

Eric Ben-Artzi, a former risk analyst, was one of three whistle-blowers. Last year, Deutsche Bank paid the S. Ben-Artzi told me that bank executives had incurred a tiny penalty for a huge crime.

Scandals have proliferated at Deutsche Bank. Since , it has paid more than nine billion dollars in fines and settlements for such improprieties as conspiring to manipulate the price of gold and silver, defrauding mortgage companies, and violating U.

Last year, Deutsche Bank was ordered to pay regulators in the U.

The Financial Conduct Authority, in Britain, chastised Deutsche Bank not only for its manipulation of libor but also for its subsequent lack of candor. In April, , the mirror-trades scheme unravelled. After a two-month internal investigation, the three Deutsche Bank employees were suspended. One was Tim Wiswell, a thirty-seven-year-old American who was then the head of Russian equities at the bank.

The others were Russian sales traders on the equities desk: Dina Maksutova and Georgiy Buznik. Afterward, Bloomberg News suggested that some of the money diverted through mirror trades belonged to Igor Putin, a cousin of the Russian President, and to Arkady and Boris Rotenberg. They are on the U. According to the U. In June, , with pressure from shareholders intensifying over the mirror trades and other scandals, the co-C.

Deutsche Bank 'suspends forex trader': report

They were replaced by John Cryan, whose remit was to clean up the bank. That September, he announced the impending close of all investment-banking activity in Russia. By the end of the evening, bankers were dancing on the bar. Many current and former employees of Deutsche Bank cannot quite comprehend how the equities desk in a minor financial outpost came to taint the entire institution. The ostensible function of the Moscow desk was straightforward: The desk had about twenty employees, and included researchers, who analyzed financial data; sales traders, who took calls from clients about buy and sell orders; and traders, who executed the orders.

In the years after the crash, profits plunged by more than half. In this environment of diminishing returns on normal stock-market activity, the Moscow equities desk was looking to find fresh revenue streams. Many businesses in the Russian Federation avoid taxes by using offshore jurisdictions, such as Cyprus, for their headquarters. Rich Russians, meanwhile, often funnel their private fortunes offshore, in an effort to hide their assets from the capricious and predatory Russian state.

Frequently, this fugitive money is invested in assets such as property: The impact of this capital flight is felt at both ends of its journey. But as the ruble and the economy foundered many Russians felt even more eager to remove their money. Mirror trading was an ideal escape tunnel. According to people with knowledge of how mirror trades worked at Deutsche Bank, the main clients who were engaged in the scheme came to the bank in through Sergey Suverov, a sales researcher. Suverov left the bank soon afterward.

He has not been charged with wrongdoing. Initially, the accounts that Volkov handled—funds based in Russia and overseas, with such bland names as Westminster, Chadborg, Cherryfield, Financial Bridge, and Lotus—placed conventional stock-market orders. But Volkov soon made it clear to his contacts at Deutsche Bank that he wanted to make a large volume of simultaneous trades.

He could not be reached for comment. What did Deutsche Bank know about the companies that Volkov represented? Evidently, all the counterparties passed both internal reviews. Deutsche Bank did little to interrogate the source of funds—including those behind Westminster and other Volkov clients. According to people who worked on the desk in , the K. The Russian equities desk generally had four sales traders who took calls from clients.

Two were American, and two—Maksutova and Buznik—were Russian. The sales traders reported to Tim Wiswell, the American in charge of the Russian equities team, and to Carl Hayes, an executive in London. Two other managers—Batubay Ozkan, in Moscow, and Max Koep, in London—oversaw the desk.

Maksutova was assigned the clients represented by Volkov. Colleagues say that she knew few personal details about Volkov. Antanta Kapital ceased trading in , and Gaydamak was later indicted in Israel for fraud and money laundering. He received probation, but he recently spent three months in prison, in France, for illegal arms trading.

In , top managers at Antanta Kapital formed Westminster Capital Management, which became one of the first major mirror-trade clients. Four employees at Deutsche Bank in Moscow recall that nobody tried to hide the scheme.

Wiswell, Buznik, and Maksutova all met with Volkov, and his orders were discussed openly on the desk. Colleagues also remember that Hayes asked both Buznik and Wiswell about the mirror trades. Within the office, conversations about the trades typically occurred face to face, and videoconferences with colleagues in London were not recorded.

Several Deutsche Bank employees in London knew about the mirror trades, even though the orders were taken in Moscow. The London office executed half the transactions. The trades were also documented by a computer system, called DB Cat, which catalogued every trade made by the bank. Hayes and Koep, the supervisors in London, could call up trading receipts on their computers. Although many people at Deutsche Bank knew about the mirror trades, not everybody was happy about them. In late , Maksutova, the sales trader, went on maternity leave, and Buznik temporarily worked with Volkov.

Buznik became uneasy that Volkov was executing identical buy and sell orders, and twice asked to meet with Wiswell to discuss the propriety of mirror trading. Wiswell assured Buznik that the trades were legitimate, and Buznik did not share his concerns with other managers.

Neither Wiswell nor his attorney responded to dozens of requests for comment. One day in , the Russian side of a mirror trade, for about ten million dollars, could not be completed: The Federal Financial Markets Service in Russia had barred two mirror-trade counterparties, Westminster and Financial Bridge, for improperly using the stock market to send money overseas.

The failed trade was a problem for Deutsche Bank. It had paid several million dollars for stock without receiving a cent from Westminster. Employees at all levels of a financial institution notice when a trading desk abruptly falls short by a few million dollars. Employees recall that the failed trade was resolved in November, , when Westminster repaid Deutsche Bank. Volkov resumed calling in mirror trades, on behalf of other counterparties. But there was a pattern suggesting malfeasance.

Clients of the scheme consistently lost small amounts of money: Wiswell, Buznik, and Maksutova also knew that there was a common interest among the counterparties, because many of them were represented by Volkov. But even Deutsche Bank employees who did not work on the desk could have concluded, after a cursory examination, how closely aligned the funds were. According to public documents, Chadborg Trade LLP, which was based in the U. Another British mirror-trades entity, ErgoInvest, was registered in the same office in Hertfordshire where Chadborg was registered.

Westminster Capital Management, meanwhile, was bought in by a man named Andrey Gorbatov. In , Gorbatov bought another Russian brokerage implicated in mirror trades: Clients of mirror trades told me that the same people who established Westminster also established one of the other counterparties: Cherryfield Management, in the British Virgin Islands. The counterparties were not owned by Russian oligarchs.

They were brokerages run by Russian middlemen who took commissions for initiating mirror trades on behalf of rich people and businesses eager to send their money offshore. A businessman who wanted to expatriate money in this way would invest in a Russian fund like Westminster, which would then use mirror trades to move that money into an offshore fund like Cherryfield.

In , when controls were lax, the fee was 0. In , when sanctions were strong, and Putin was determined to retain as much wealth as he could in Russia, the fee rose to more than five per cent. Crucially, the footprint of individual mirror trades was small.

Mirror trades never exceeded twenty million dollars a day, and were normally in the region of ten million dollars. Whose fortunes were being hidden? In April, I met a broker in Moscow who had worked with clients of the Deutsche Bank mirror trades. He told me that mirror trading was not a new scheme. It was invented, in the late aughts, by other banks in Russia, to help importers avoid heavy taxes on their products.

The scam was ingeniously simple. A Russian importer would claim on his invoices that he had bought, say, ten rubber ducks rather than the true figure of ten thousand rubber ducks, in order to pay tax on only ten rubber ducks. Of course, the importer still needed to pay his supplier overseas for the remaining rubber ducks. He did this by expatriating money using mirror trades.

Instead of paying a large tax to the Russian treasury, the importer paid a much smaller fee to money launderers. The broker found it hard to believe that the wealthiest Russians, such as the Rotenberg brothers, would have used mirror trades. Another Russian banker, who helped to set up the mirror-trade scheme, told me that much of the money belonged to Chechens with connections to the Kremlin. Chechnya, the semi-autonomous region in the North Caucasus, is ruled by the exuberantly barbarous Ramzan Kadyrov, who is close with Putin.

Chechnya receives huge subsidies from Russia, and much of the money has ended up in the pockets of figures close to Kadyrov. The Deutsche Bank mirror-trades operation appears to be linked to an even bigger attempt to expatriate money: Starting in , fake loans and debt agreements involving U.

When the Moldovan scheme unravelled, in late , several people were arrested. One was Alexander Grigoriev, a Russian financier who controlled Promsberbank—a now defunct institution, based in a Russian backwater called Podolsk, which counted Igor Putin as a board member. Deutsche Bank has not commented on whose money was expatriated through the mirror trades, although John Cryan, the C.

However, the case raises questions about how effective our systems and controls were, especially with regard to the onboarding of new clients, an area where we experienced difficulties in collecting sufficient information. This passive language is hard to square with the blatant nature of the scheme. In March, the Financial Conduct Authority of the U. He had just argued with executives at a board meeting. Mirror trades occurred for at least two years before anyone raised any concerns, and when red flags appeared it was months before anyone acted on them.

According to Bloomberg News, the internal report notes that, in early , a series of inquiries about the propriety of mirror trades had been logged by multiple parties, including Hellenic Bank, in Cyprus, the Russian Central Bank, and back-office staff members at Deutsche Bank itself. When Hellenic Bank executives contacted Deutsche Bank and asked about the unusual trades, they did not hear back from the compliance department.

Instead, their inquiry was fielded by the equities desk that was performing the mirror trades. Deutsche Bank in Moscow reassured Hellenic Bank that everything was in order.

Tim Wiswell, the head of the equities desk, was known to his colleagues as Wiz. He grew up in Essex, Connecticut. He has strong connections to Russia. His father, George C. Wiswell III, worked for many years in the oil-and-gas sector in Moscow. Tim spent a year of high school there. Wiswell graduated from Colby College, in Maine, in In his mid-twenties, he arrived in Moscow. He already spoke Russian. His first job was at Alfa-Bank, the private bank of Mikhail Fridman, the second-wealthiest man in Russia.

When a salaried position did not materialize, he moved to a junior position in equities at United Financial Group, the Russian investment bank co-founded by Charlie Ryan, an American pioneer in post-Soviet Russian finance.

Within a few years, Wiswell had become the head of the Russian equities desk. Tim and Natalia Wiswell at their wedding, in Newport, Rhode Island, in Many young Americans were drawn to Moscow banks in the aughts. Will Hammond, an American who worked with Wiswell at U.

It was a very aggressive sales mentality, which was going on across the board across all the Russian banks. In America, the tactic would be considered insider trading. Insider trading did not become illegal in Russia until Many mirror trades were also over-the-counter. The former colleague recalls occasions in which Lanturno lost money on a trade, either by buying too high or selling too low.

The next morning, however, bank records would indicate that Lanturno had not lost money on the trade. When challenged by colleagues, Wiswell would say that he had altered the entries for Lanturno to rectify an error made on his part. The sums involved were small and easily ignored—the reversed losses were between ten and twenty thousand dollars. Two photographs on Facebook show that the men also went skiing together.

Former employees recall trades being amended regularly. Recently, I received a photocopied trade blotter from a source within Deutsche Bank. According to colleagues, when Wiswell was confronted about the transactions he said that they had been approved by superiors. When presented with company documents from Cyprus showing that Lynch owned all the shares in Gigalogic between and , the representative declined further comment. For Maksutova and Buznik, at least, there was no obvious financial benefit to performing mirror trades: Many at Deutsche Bank, however, believe that Wiswell profited personally from the scheme.

In August, , shortly after Wiswell was suspended from Deutsche Bank, he was fired. He initiated a wrongful-dismissal suit. The court hearings, in Moscow, were open to the press. Wiswell lost the suit. Deutsche Bank refused to say whether it believes that Wiswell took bribes, and declined to discuss the case further for this article, perhaps because of the ongoing investigations into its Moscow office. None of the three have been charged with wrongdoing. On an April evening in Moscow, I met with a broker who had intimate knowledge of the structure of the mirror trades.

The city was emerging from the choking cold of winter, and young people flirted outside Paveletskaya Station as if it were high summer. As the broker and I walked across the square, he characterized mirror trades as just one of a thousand ruses employed by smart businessmen. But why, I asked him, would somebody with a prominent position at a major bank get involved in such a scheme?

He said that Wiswell had been paid handsomely by clients of the mirror trades. For the architects of the scheme, the broker explained, it was worth it to bribe someone inside the bank: They think it will hook you, so you are not going to do unexpected things. He recently launched a craft-beer business, Barbell Brewery, in Moscow, but some months ago he left the country with his wife and their two children for a trip to Southeast Asia.

In March, his wife posted a request on Facebook for a nanny, noting that her family was on an extended stay in Bali, in the resort town of Seminyak. She later told a Balinese dance instructor that the family planned to remain on the island for a year.

Tim Wiswell, in Bali. The photograph was posted on Facebook earlier this year. Former colleagues expect Wiswell to return to Moscow, where he owns an apartment. Russia is likely to be a friendly jurisdiction to him. When Moscow regulators looked into the mirror trades, they found little to trouble them.

They said simply that Deutsche Bank had fallen victim to an illegal scheme, and levied a token punishment—about five thousand dollars. American and European regulators are likely to be much more punitive. Several newspapers ran articles about it, and Harvey appeared on both CNN and the BBC to discuss his research.

The authors found that in the United Kingdom the pattern was anything but random. In a connected and digitized financial system, how could such capital flight happen? Bank transfers leave a footprint.

Deutsche Bank Is Said to Fire 3 Currency Traders in New York - The New York Times

Imports and exports are accounted for. How could money disappear in one place and show up in another? The two strategists did not have to wait long, or look far, to learn the shameful answer: John Cryan, the Deutsche Bank C.

Whatever the outcome of the various investigations into mirror trades, the bank is in trouble. It lost seven and a half billion dollars last year.

The only investors who now like the bank are short-sellers. The financier George Soros took a short position in Deutsche Bank before the Brexit referendum, effectively betting against the share price, and is estimated to have made more than a hundred million dollars as the stock nose-dived. Meanwhile, unlike many other Wall Street lenders, Deutsche Bank continues to loan millions of dollars to businesses associated with Donald Trump.

When the Times questioned Trump recently about his credentials on Wall Street, he said that a private wealth manager at Deutsche Bank, Rosemary Vrablic, could vouch for him.

The mood within the bank is bleak, not least because Cryan has announced that job cuts are forthcoming. A recent survey found that less than half of Deutsche Bank employees are proud to work there. This summer, Deutsche Bank, which is a hundred and forty-six years old, has been valued at about eighteen billion dollars—the same as Snapchat.

Any kind of failure at Deutsche Bank, the I. Cryan has promised to settle the Russian case by the end of this year, and the bank recently set aside about a billion dollars for legal costs. This may not be enough. Last year, Deutsche Bank was fined the relatively small sum of two hundred and fifty-eight million dollars for its circumvention of sanctions against Iran, Sudan, and elsewhere.

In , however, BNP Paribas agreed to pay nearly nine billion dollars to settle with regulators over sanctions violations. And the mirror trades may exact a heavy fine from U. A payment as vast as the one levied at BNP Paribas could require Deutsche Bank to raise capital to survive. A German government bailout might become a necessity. The shock to the global economy would be profound. The Quest to Run the Impossible Marathon. Sign up for our daily newsletter: Shop Sign in Link your subscription.

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