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Deutsche Bank threatens to end business with Russia

Moscow

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 information, according to a letter seen by Bloomberg News. The letter was signed by investment-banking head Garth Ritchie and one of the bank's lawyers, Alex Scott-Gall.

The bank's executives wrote in a June 27 letter to Moscow: "Deutsche Bank is currently undertaking a review of the products that the government of the Russian Federation has with Deutsche Bank AG, London branch and of the Know-Your-Customer documentation that we hold on record.

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"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."

Deutsche Bank's Know-Your-Customer or KYC procedures have long been a source of concern for international regulators; the lender itself recently admitted that its processes were getting too complicated.

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

The Russian newspaper Vedomosti reported on Deutsche Bank's letter earlier. "Regular formal reviews are a standard part of the bank's KYC procedures with customers around the world," a spokesman for the bank said on Thursday, declining further comment.

Chief executive officer Christian Sewing recently appointed a new chief operating officer, Frank Kuhnke, whose responsibilities include improving Deutsche Bank's KYC procedures. Mr Kuhnke has changed the way the bank obtains this documentation from its clients; the blunt way he sometimes goes about getting the paperwork - for example, by threatening to end business relationships - has contributed to his moniker "Frank the Tank" said two people close to the matter. BLOOMBERG