Deutsche Bank London threatens to end business with Russia

A sign sits outside Deutsche Bank offices at 1 Great Winchester Street in London, U.K., on Wednesday, March 24, 2010. The U.K.Õs Financial Services Authority arrested a seventh person in an insider trading probe that has already ensnared workers at Deutsche Bank AG, Exane SA and hedge fund Moore Capital Management LLC. Photographer: Christopher Ratcliffe/Bloomberg

By BLOOMBERG

FRANKFURT • Deutsche Bank AG has frequently come under criticism for lax client oversight. It has now decided to crack down — on Russia.

The bank’s London branch threatened in June to stop doing business with the Russian government if it fails to submit documents that the lender needs to refresh its know-your-customer (KYC) information, according to a letter seen by Bloomberg News that was signed by investment-banking head Garth Ritchie and one of the bank’s lawyers, Alex Scott-Gall.

“Deutsche Bank is currently undertaking a review of the products that the government of the Russian Federation has with Deutsche Bank, London branch, and of the KYC documentation that we hold on record,” the executives wrote in the June 27 letter to the government.

“If we do not hear from you within 30 days of the date of this letter, we may issue a further notice” of our intention to terminate our business relationship as transactions mature, they wrote.

Deutsche Bank’s KYC procedures have long been a source of concern for international regulators, with the lender recently admitting that its processes are too complicated.

Last year, the bank was fined by UK and US authorities for compliance failures that saw the bank helping wealthy Russians move about US$10 billion (RM41 billion) out of the country, using methods that the New York Department of Financial Services said could have facilitated money laundering.