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Deutsche Bank Had Flagged Manafort-Related Transactions

Transfers reflect bank’s role as global money conduit

By Jenny Strasburg Dec. 14, 2017 8:14 p.m. ET 47 COMMENTS
https://www.wsj.com/articles/deutsche-bank-had-flagged-manafort-related-transactions-1513300450

Deutsche Bank AG earlier this year flagged around $30 million in potentially suspicious transactions as part of an internal investigation into its role as a conduit for money involving Paul Manafort or people and entities connected to him, according to a person briefed on the matter.

The findings, which were discussed inside Deutsche Bank in late spring and early summer, primarily concerned cash flows tied to Mr. Manafort, who for about five months was President Donald Trump’s 2016 campaign chairman, and Mr. Manafort’s former business partner Richard Gates III, the person said.

Deutsche Bank is a major correspondent bank for U.S. dollar transactions around the world. Correspondent banks serve as middlemen in international transactions, facilitating transfers for other banks into countries where they have limited or no operations. Banks can label transactions as suspicious based on origin of funds, specific concerns about parties involved or other reasons.

The discussions at the bank coincided roughly with the appointment in May of Robert Mueller as U.S. special counsel to probe Russia’s meddling in the 2016 U.S. presidential election, according to people familiar with the matter.

As scrutiny around several of Mr. Trump’s former advisers was heating up, Deutsche Bank executives were assessing the bank’s role in handling hundreds of transactions that might have involved people in Mr. Trump’s orbit, have originated in Russia, or both, said some of the people familiar with the matter.

In recent months, the German lender has received several subpoenas in Mr. Mueller’s investigation, according to some of the people. A Deutsche Bank spokeswoman declined to comment on any flagged transactions and referred to a previous statement that the bank “takes its legal obligations seriously and remains committed to cooperating with authorized investigations into this matter.”

Deutsche Bank previously reported some of the transactions to U.S. anti-financial-crime authorities and shared at least some of its internal findings with officials in the U.S., said the person briefed on the matter. In October, Messrs. Manafort and Gates pleaded not guilty to a dozen criminal counts including money laundering and conspiracy against the U.S. The indictment alleged the men laundered money through a series of transactions involving foreign bank accounts. Mr. Manafort resigned as Mr. Trump’s campaign chairman in August 2016. Mr. Manafort’s spokesman declined to comment. Mr. Gates’s lawyer declined to comment.

It couldn’t be determined whether the transactions highlighted in Messrs. Manafort and Gates’s indictment were among those flagged by Deutsche Bank.

Deutsche Bank flagged transactions that occurred from roughly 2010 to 2015, according to the person briefed on the matter. The person said the bulk of the payments highlighted in the internal probe happened between 2012 and 2014.

The indictment doesn’t identify banks involved in the transactions it cites. Deutsche Bank hasn’t been accused of wrongdoing.

Prosecutors accused Mr. Manafort of avoiding taxes and financing a “lavish” lifestyle using income he earned while lobbying for the pro-Russian government of Ukraine between 2006 and 2016. The indictment charged that he used a network of foreign corporate entities and accounts based in Cyprus, the Caribbean nation of St. Vincent and the Grenadines, and the U.K.

The government said more than $75 million flowed through offshore accounts linked to Messrs. Manafort and Gates. It said Mr. Manafort laundered more than $18 million, some of which he used to buy New York real estate.

The bank’s receipt of a subpoena in Mr. Mueller’s investigation was reported last week by several media outlets including The Wall Street Journal. The Journal reported that the special counsel sought documents and data related to people or entities affiliated with the president.

Jay Sekulow, a spokesman for Mr. Trump’s legal team, said, “Deutsche Bank hasn’t received subpoenas on the president, the president’s businesses or the president’s family.” Moscow has denied meddling in the election, and Mr. Trump has called the special counsel’s investigation a “witch hunt.”

The Deutsche Bank internal probe related to Mr. Manafort focused in large part on its role as correspondent bank, the person briefed on the matter said.

Some of the money Deutsche Bank handled appeared to originate with Russian or Turkish entities, the person said. Some payments came through Cyprus banks into an account or accounts in the U.S. at Wachovia Corp., now owned by Wells Fargo & Co., people familiar with the matter said.

Cyprus is a common gateway for money flowing to or from Russia.

Wells Fargo has received at least one subpoena related to Mr. Mueller’s investigation, according to one of those people. The bank is complying with information requests, some as recent as last week, and is in the process of providing information to the government, that person said. A Wells Fargo spokeswoman declined to comment, as did a spokesman for Mr. Mueller’s office.

Deutsche Bank also is continuing to provide information to investigators, according to people briefed on the matter. The bank has longstanding ties to Mr. Trump, having lent him more than $300 million for real-estate projects in recent years, according to public disclosures.

—Emily Glazer and Peter Nicholas contributed to this article.

https://www.wsj.com/articles/deutsche-bank-had-flagged-manafort-related-transactions-1513300450