Deutsche Bank’s $10-Billion Scandal

Posted: August 27, 2016 by Nazim in Business Entities


The Panama Papers gave some press coverage to a large-scale problem with business entities. From tax avoidance, to money laundering, to simply concealing the true owners of assets, there are plenty of legitimate complaints about them, and the army of financial service providers that facilitate them (including attorneys). The New Yorker digs deep into how Deutsche Bank facilitated $10,000,000,000 – that’s billions with a “B”, equivalent to the GDP of Malta or Madagascar – in money laundering for criminal organizations. And this behavior isn’t limited to exotic places like Panama or Switzerland. Here’s an excerpt:

In any national economy, the authors explained, there are capital flows that do not appear on what is called “the balance of payments.” Errors and accidental omissions should be random, and therefore reveal no pattern. The authors found that in the United Kingdom the pattern was anything but random. Britain had “large positive net errors” that suggested significant “unrecorded capital inflows.” Analyzing data from other countries, Harvey and Winkler deduced where the vast majority of unrecorded capital flowing into the U.K. was coming from. Since 2010, they wrote, about a billion and a half dollars had arrived, unrecorded, in London every month; “a good chunk” of it was from Russia. “At its most extreme,” the authors explained, the unrecorded capital flight from Moscow included “criminal activity such as tax evasion and money laundering.


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