Deutsche Bank Burden in U.S.

Settlement
Eased by Fine Print
Bloomberg News
January 20, 2017

Deutsche Bank sought an unusual provision in its $7.2 billion mortgage-bond settlement with the
U.S. government, and seems to have won it: the bank can pay down part of its penalty by lending
money to fund managers.

As part of the agreement, Germany's largest bank has to provide $4.1 billion of relief for
mortgage borrowers. Other lenders that reached similar accords with the U.S. have also had
consumer obligations, which they have usually met by easing terms on loans that they made, or
that they bought.

Those banks often got credit for relief even if they no longer owned the mortgages or collected
payments on them, and losses were borne by fund managers. That sparked criticism from
consumer advocates who said that the borrower relief figures inflated the sense of pain that
lenders truly bore in agreements over the subprime mortgage bonds that helped trigger the
financial crisis a decade ago.

The Deutsche Bank deal seems to go one step further: it allows the German lender to finance
other firms that buy nonperforming loans on the cheap and that restructure them for profit. That
provision appears in two footnotes in the more than 110 pages of settlement documents, and says
the bank will get credit for "financing arrangements" that it offers to other firms that can modify
and make mortgages. Those firms may include private equity funds or mortgage payment
collectors known as servicers.

New Provision

The lender sought that provision in part because it doesn't have retail mortgage operations in the
U.S. to supply it with soured loans, and has a strained balance sheet that makes buying billions of
dollars of home loans difficult. Other banks didn't have that language included in their
agreements, including the Credit Suisse Group accord that the government released this week,
according to a Bloomberg examination of major lenders' settlement documents. Representatives
for the Justice Department and Deutsche Bank declined to comment.

Bloomberg first reported earlier this month that the Frankfurt-based lender, looking to cut the
costs of its settlement, was considering how it could meet its relief obligations in unconventional
ways. The bank has had discussions about possible firms to finance, a person with knowledge of
the matter said at the time.
The provision in the agreement may allow Deutsche Bank to get credit for doing business as
usual, said Julia Gordon, an executive vice president at the National Community Stabilization
Trust, a Washington-based nonprofit that focuses on housing.

"The buyers the bank is financing should have to show that Deutsche Bank is helping them
achieve better outcomes than they'd otherwise produce," Gordon said, referring to funds and
servicers that buy home loans in government auctions.

The Deutsche Bank settlement is one of a flurry of mortgage-related cases that U.S. President
Barack Obama's administration closed before he left office, including a settlement with Credit
Suisse. Barclays opted for litigation instead of settling. Donald Trump was sworn in as president
on Friday.

'Crisis Contributor'

Deutsche Bank is already getting an easier break than most other lenders by being allowed to
count consumer relief for such a large portion of its settlement, said Mark Adelson, a consultant
and former chief credit officer for bond rating firm S&P Global Ratings. Because consumer
relief expenses aren't often borne directly by the bank, it's a lighter form of penalty than a fine,
he added.

About 57% of the bank's agreement was relief, compared with around 31% for JPMorgan Chase
& Co.'s $13 billion settlement announced in November 2013.

Deutsche Bank's final agreement was announced on Tuesday. U.S. Attorney General Loretta
Lynch said in a statement then that "Deutsche Bank did not merely mislead investors" in its
mortgage bonds, "it contributed directly to an international financial crisis."

Deutsche Bank fined $630m over Russia money laundering claims

Authorities in US and UK issue fine after saying bank used offices in Moscow and London to
move $10bn out of country

Deutsche Bank has been fined after New York and UK authorities found pervasive weakness in
its money laundering safeguards. Photograph: Kai Pfaffenbach/Reuters

Jill Treanor theguardian

Tuesday 31 January 2017 14.36 EST First published on Tuesday 31 January 2017 00.00 EST

Deutsche Bank has been fined more than $630m (506m) for failing to prevent $10bn of Russian
money laundering and exposing the UK financial system to the risk of financial crime.

The UKs Financial Conduct Authority imposed its largest ever fine 163m for potential
money laundering offences on Germanys biggest bank, which it said had missed several
opportunities to clamp down on the activities of its Russian operations as a result of weak
systems to detect financial crime between 2012 and 2015.

A US regulator, the New York Department of Financial Services (DFS), also fined the bank
$425m as it listed problems at Deutsche including one senior compliance officer stating he had
to beg, borrow, and steal to get the resources to combat money laundering. As part of the
settlement, the DFS has imposed a monitor, who will police the behaviour inside the bank for
two years.

Deutsche Bank and Credit Suisse agree multi-billion-dollar settlements with US

The latest run-in with regulators comes as Deutsches chief executive, John Cryan, tries to clean
up the bank. Last month it paid $7.2bn to settle a decade-old toxic bond mis-selling scandal with
the US Department of Justice .

The German bank admitted that the investigations into its Russian operations over so-called
mirror trades had not yet finished. It said it was cooperating with other regulators and law
enforcement authorities. The DoJ is reported to be among them.

Deutsches share price has been extremely volatile in recent months over concerns about the
banks ability to pay fines, at one point dipping to less than 11 last autumn . Its share price
before the financial crash was 117.

As the latest penalties were announced, the shares fell by 0.5% to 18.52 valuing the bank at
25bn, which is less than half that of the UKs Lloyds Banking Group, for example.

In a memo to staff Karl von Rohr, chief administrative officer of Deutsche,said: We deeply
regret the banks role in the issues cited. He added that the number of staff employed to fight
crime had risen 30% in 2016 and now stood at 700. Another 450 will be hired this year.

The FCA said Deutsches anti-money laundering (AML) controls were not tough enough to stop
the bank being used by unidentified customers to transfer approximately $10bn from Russia to
offshore bank accounts in a manner that is highly suggestive of financial crime. Money was
moved via Deutsche Bank in the UK, to obank accounts overseas, including onesin Cyprus,
Estonia, and Latvia, the FCA said.

Mark Steward, director of enforcement and market oversight at the regulator, said: Financial
crime is a risk to the UK financial system. Deutsche Bank was obliged to establish and maintain
an effective AML control framework. By failing to do so, Deutsche Bank put itself at risk of
being used to facilitate financial crime and exposed the UK to the risk of financial crime.

The size of the fine reflects the seriousness of Deutsche Banks failings. We have repeatedly
told firms how to comply with our AML requirements and the failings of Deutsche Bank are
simply unacceptable. Other firms should take notice of todays fine and look again at their own
AML procedures to ensure they do not face similar action.
The penalties relate to the bank failing to obtain information about its customers involved in
mirror trades ones which mirror each other and have no economic purpose which allowed
Deutsche Banks Russia-based subsidiary (DB Moscow) to execute more than 2,400 pairs of
trades between April 2012 and October 2014.

Shares in major Russian companies were paid for in roubles through the Moscow office and then
the same stock would be sold through London, sometimes on the same day, for a related
customer, the New York regulator said. The sellers were registered in offshore locations and
received payment for the shares in dollars. A dozen entities were identified.

The FCA said the purpose of $6bn mirror trades was the conversion of roubles into US dollars
and the covert transfer of those funds out of Russia, which is highly suggestive of financial
crime.

The regulators found almost $3bn in 3,400 suspiciousone-sided trades also occurred. The FCA
believes that some, if not all, of these formed one side of mirror trades. They were often
conducted by the same customers involved in the mirror trading.

This Russian mirror-trading scheme occurred while the bank was on clear notice of serious and
widespread compliance issues dating back a decade. The offsetting trades here lacked economic
purpose and could have been used to facilitate money laundering or enable other illicit conduct,
and todays action sends a clear message that DFS will not tolerate such conduct, said New
Yorks financial services superintendent, Maria Vullo.

The FCA described Deutsche Bank as being exceptionally cooperative and having committed to
solve the problems in its AML systems. The bank received a 30% discount for its cooperation.
This is a contrast to 2015 when the bank was fined for rigging Libor and accused of being
obstructive towards regulators in their investigations into the global manipulation of the
benchmark rate.

Last year, Deutsche said, it had taken disciplinary measures with regards to certain individuals
in this matter and will continue to do so with respect to others as warranted.

Five previous Deutsche fines

January 2017 500m for Russian money-laundering offences.

January 2017 75m to resolve a US government lawsuit over hiding tax liabilities to the
Internal Revenue Service in 2000.

December 2016 5.9bn for toxic bond mis-selling scandal.

November 2015 200m for breaching US sanctions with Iran and Syria.

April 2015 1.7bn for rigging Libor.

ServiceLink fined $65 million for LPS foreclosure deficiencies

Fine related to 2011's industry-wide foreclosure settlement

January 24, 2017 Ben Lane

In 2011, Lender Processing Services was part of a massive settlement with the government
over industry-wide foreclosure misconduct that occurred after the housing crash.

That settlement stemmed from document missteps in the third-party foreclosure process at some
very large banks and mortgage servicers in the aftermath of the subprime crisis.

The settlement also included names like Bank of America, JPMorgan Chase, Wells Fargo,
and Citigroup.

While those names stuck around, LPS eventually disappeared. LPS former parent, Fidelity
National Financial, bought up the company and merged it with another subsidiary, ServiceLink
Holdings, and formed Black Knight Financial Services.

On Tuesday, the ghost of LPS came back to haunt ServiceLink and Black Knight, as the Federal
Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance
Corp. announced that they are fining ServiceLink $65 million for the improper actions of LPS
that contributed to that 2011 settlement.

A release from the government agencies is scant on details that led to the fine.

The agencies simply state:

The federal banking agencies today fined ServiceLink Holdings, LLC (ServiceLink Holdings),
$65 million for improper actions by its predecessor company, Lender Processing Services, Inc.
(LPS), which resulted in significant deficiencies in the foreclosure-related services that LPS
provided to mortgage servicers.

The penalty assessed by the three federal banking agencies--the Federal Reserve Board, the
Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency--
against ServiceLink Holdings satisfied the document review provision of the previous
enforcement action.

The accompanying consent order, which can be read here, references the history of LPS, and
how the terms of the original consent order transferred as LPS changed hands and eventually
merged.

The new consent order states that on Jan. 17, 2017, the board of managers of ServiceLink
authorized the companys chief compliance officer, Paul Perez, to enter into the amended
consent order and agree to the fine.
The agencies say that LPS will send the $65 million fine to the Department of the Treasury.

The agencies also say that they will continue to monitor the ServiceLinks compliance with other
provisions of the original and amended consent order.

HousingWire attempted to contact Fidelity National, ServiceLink, and Black Knight for
comment on the fine.

A Black Knight spokesperson said that the company "is not a party to the agreement and is not
responsible for paying any portion of the fine."

This article will be updated should one of the other companies respond.

[Update: This article is updated with a statement from Black Knight.]

ServiceLink Fined $65M for LPS Robo-Signing Activities

By Jacob Passy January 24, 2017

Federal banking agencies have levied a $65 million fine against Fidelity National Financial
subsidiary ServiceLink Holdings over deficiencies in the foreclosure-related services provided
by its predecessor company.

The fine, assessed by the Federal Reserve Board, the Federal Deposit Insurance Corp. and the
Office of the Comptroller of the Currency, satisfies a provision of a previous consent order
against Lender Processing Services. The fine will be paid to the U.S. Treasury.

The new agreement assessing the fine replaces portions of an April 2011 order against LPS that
forced the company to change how it handled its default management services. While federal
banking agencies will continue to monitor compliance with certain aspects of the 2011 order, the
new agreement said that the agencies will not take further actions against ServiceLink and its
affiliates based on the conduct that precipitated the original order.

LPS had faced accusations for a number of years that the company and its subsidiaries
fraudulently signed legal documents used in foreclosure proceedings. Fidelity National acquired
LPS in 2014, and the company's business was split between ServiceLink and Black Knight
Financial Services, which is shielded from a fine through an agreement with ServiceLink.

Before being bought by Fidelity National, LPS reached a $127 million settlement with state
regulators and paid $35 million to settle a Justice Department inquiry.

Fidelity National declined to comment on the fine, but a spokesperson for the company reiterated
that it related back to the consent order against LPS that predates Fidelity's acquisition of the
company. Previous reports suggested that regulators were seeking a large penalty of more than
$200 million.
 Deutsche Bank settles New York lawsuit with $95M payment
Originally published January 4, 2017 at 3:27 pm Updated January 4, 2017 at 4:43 pm

Share story

The Associated Press

NEW YORK (AP) Deutsche (DOY-chuh) Bank will pay $95 million to resolve a New York civil lawsuit
accusing it of evading tens of millions of dollars in federal taxes through shifty financial moves.

The agreement to settle a 2014 lawsuit brought by the U.S. government was approved Wednesday by a
Manhattan federal court judge.

U.S. Attorney Preet Bharara (buh-RAH-ruh) says his office revealed how the bank used a web of shell
companies to dodge taxes.

Deutsche Bank AG is based in Frankfurt, Germany. It says its pleased to resolve the claim and put the
events from more than 16 years ago behind it.

Business

Deutsche Welle

Deutsche settles another of its myriad lawsuits

Germany's biggest lender, Deutsche Bank, has agreed to pay a fine of close to a hundred million dollars
to settle a fraud case in connection with the bank's use of a US shell company to avoid paying taxes.

Preet Bharara, the US attorney for the Southern District of New York, announced Wednesday that
Deutsche Bank had admitted to its actions designed to avoid taxes and agreed to pay $95 million (89.8
million euros) to the United States to account for this conduct.

Germany's biggest bank had used a "web of shell companies and calculated transactions" to try to evade
paying tens of millions of dollars in taxes, Bharara added in the statement.

The case dates back to 2000 when Deutsche Bank acquired US holding company, Charter, which had
stock holdings in pharmaceutical company Bristol-Myers Squibb (BMY).

To avoid paying high taxes on the gain from the sale of the stock, Deutsche Bank was alleged to have
arranged to sell it to a shell company, and then to buy it back.
The transaction cleansed Deutsche Bank's gain, sticking the shell company with the $52 million tax bill.
The shell company then tried to offset its gain with foreign currency losses, but US tax authorities
concluded the losses were from a fraudulent tax shelter that Deutsche Bank also was involved in.

Under the settlement, the German bank admitted the transaction was "pre-planned" and that it was
designed to avoid the tax liability associated with the stock. It knew the shell company had no material
assets and no operating business, and so could not pay the taxes resulting from the stock sale.

The settlement was the latest by the German lender in its efforts to close hundreds of lawsuits resulting
from past wrongdoings, especially during the 2008/2009 financial crisis. Last month, it agreed to pay
$7.2 billion to settle probes into the sales of toxic mortgage-backed securities that contributed to what's
become known as the US subprime crisis.