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Deutsche Bank Under Scrutiny in Russia Over Tax Practices

Deutsche Bank Under Scrutiny in Russia Over Tax Practices

By Steven Arons and Anna Baraulina

Deutsche Bank AG, which last month settled charges that it helped investors launder moneythrough its business in Moscow, remains under scrutiny in Russia over its tax practices.

“As part of an ongoing routine audit, Deutsche Bank is working with Russian tax authorities on matters relating to standard business operations that follow normal industry practice,” the Frankfurt-based lender said in an emailed statement on Monday.

The bank is suspected of using foreign-exchange swaps to lower the base for calculating income tax in Russia, a person with knowledge of the matter said Monday. The person asked not to be identified because the inquiry hasn’t been concluded.

Deutsche Bank may face claims for as much as 10 billion rubles ($170 million), said Anatoly Aksakov, head of the Association of Regional Banks of Russia. Aksakov, who also presides over the Russian parliament’s finance committee, said Deutsche Bank contacted him seeking help in the matter and that he has asked the finance ministry to look into it. Deutsche Bank declined to comment on those assertions.

Last month, regulators in the U.K. and the U.S. fined Deutsche Bank $629 million for failing to properly vet cash transfers abroad from its Russia unit through so-called mirror trades. Separately, the Russian central bank has accused a former Deutsche Bank trader in the country of making illegal trades at the expense of his employer.

Germany’s biggest lender reported a loss of 1.4 billion euros ($1.5 billion) for last year as litigation costs shaved 2.4 billion euros off the bottom line. While Chief Executive Officer John Cryan has said 2016 will be the peak restructuring year, the bank still faces a number of legal cases, including a Justice Department probe into whether the mirror trades violated U.S. sanctions against Russia.

“We’ve put an awful lot of our difficulties behind us,” Cryan said at a news conference on Feb. 2 in Frankfurt. “Our expectation would be that we would be profitable this year.”

The Russian news website RBC reported the tax audit earlier Monday.

https://www.bloomberg.com/news/articles/2017-02-13/deutsche-bank-under-scrutiny-in-russia-over-tax-practices



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