Deutsche Bank to pay $258 mn for violating US sanctions

Yahoo – AFP, Veronica Smith, 4 Nov 2015

Deutsche Bank will pay $258 million in fines for doing business with
US-sanctioned countries like Iran and Syria (AFP Photo/Daniel Roland)

Washington (AFP) - German banking giant Deutsche Bank will pay $258 million in fines for doing business with US-sanctioned entities and countries like Iran and Syria, US regulators said Wednesday.

"The firm did not have sufficient policies and procedures to ensure that activities conducted at its offices outside of the United States complied with US sanctions laws," said the Federal Reserve, which announced the penalties along with the New York State Department of Financial Services.

Deutsche Bank will pay $200 million to the NYDFS and $58 million to the Federal Reserve.

In addition, Germany's largest bank will install an independent monitor and fire six employees who were involved in the sanctions-evasion scheme, and bar three other employees from any work involving the company's US operations.

From at least 1999 through 2006, Deutsche Bank disguised 27,200 dollar-clearing transactions valued at more than $10.86 billion to skirt US sanctions, the authorities said.

The customers involved in the transactions included Iranian, Libyan, Myanmar, Syrian and Sudanese entities.

Deutsche Bank decided to pursue a "lucrative" US dollar business for sanctioned customers, the NYDFS said.

Cloaking transactions

To disguise the transactions, the bank altered the information included on the payment message, a method known as wire stripping, before the message was passed to the correspondent clearing bank in the US.

Deutsche Bank told sanctioned customers it was crucial to note "Do not mention our bank's name" in the message for payments that may involve the US to avoid raising a red flag.

"Otherwise it is possible that the (payment) instruction would be sent immediately to the USA with your full details," the bank said, according to the New York regulator.

Another bank instruction said: "Important: no Iranian names to be mentioned when making payment to New York."

Deutsche Bank also concealed the true nature of the transactions by splitting an incoming payment message into two: one that included all the details, sent to the beneficiary's bank, and a second that excluded details about the underlying parties to the transaction, sent to Deutsche Bank New York or another clearing bank in the US.

"The special processing that the Bank used to handle sanctioned payments was anything but business as usual; it required manual intervention to identify and process the payments that needed 'repair' so as to avoid triggering any sanctions-related suspicions in the US," the NYDFS said.

Anthony Albanese, acting chief of NYDFS, said the US authorities were "pleased" that Deutsche Bank had worked with them to resolve the matter and take action against employees who engaged in the misconduct.

"To truly deter future wrongdoing, it is important to focus not just on corporate accountability, but also individual accountability," he said.

Deutsche Bank welcomed the closure of the case.

"The conduct ceased several years ago, and since then we have terminated all business with parties from the countries involved," said Renee Calabro, a spokesman for Deutsche Bank New York, in an emailed statement.

The penalties announced Wednesday are dwarfed by the fines for sanctions violations paid by French banks BNP Paribas and Credit Agricole, at $8.9 billion and $787 million, respectively.

The NYDFS, which has been aggressive in the sanctions cases and other large enforcement cases involving foreign banks, is also far along in discussions with Deutsche Bank on investigations into manipulating the foreign exchange market and facilitating money laundering in Russia, a person familiar with the matter told AFP on Tuesday.

Deutsche Bank is also among about two dozen large banks being sued for allegedly rigging the US Treasury bond market.

The German bank was fined a record $2.5 billion in May for its involvement in rigging interest rates.

Swiss authorities probe 7 banks for suspected metals price fixing

Yahoo – AFP, Nina Larson, 28 Sep 2015

Swiss competition authorities are investigating UBS, HSBC, Deutsche Bank 

and four other banks on suspicion of price fixing in the precious metals market

(AFP Photo/Fabrice Coffrini)

Geneva (AFP) - Swiss competition authorities said Monday they were investigating UBS, HSBC, Deutsche Bank and four other major banks for suspected price fixing in the trade of precious metals like gold and silver.

The Swiss Competition Commission (COMCO) said it was looking into whether seven banks had colluded to manipulate prices in the precious metals market.

The watchdog said in a statement that it had "opened an investigation against two Swiss banks, UBS and Julius Baer, as well as against the foreign financial institutions Deutsche Bank, HSBC, Barclays, Morgan Stanley and Mitsui."

The Swiss Competition Commission says

it is investigating two Swiss banks, UBS 

and Julius Baer, as well as against the

 foreign financial institutions Deutsche

Bank,HSBC, Barclays, Morgan Stanley

and Mitsui (AFP Photo/Fabrice Coffrini)

COMCO, which opened a preliminary probe in February, said it now had indications that the banks had "possibly concluded illegal competition defying deals" in the trade of the precious metals gold, silver, platinum and palladium.

"We think they can have manipulated the price of these precious metals," COMCO deputy chief Patric Ducrey told AFP.

The competition authority said it especially suspected the banks had fixed the prices of bid/ask spreads within the market.

Ducrey said the banks had all been informed of the ongoing probe, and that the investigation would likely conclude in 2017.

Impact unclear

Credit Suisse analyst Cristine Schmid told AFP it was too early to say how the COMCO probe would impact the targeted banks, beyond pushing up their legal costs.

HSBC is one of several banks being 

investigated by Swiss authorities for

price fixing (AFP Photo/Philippe Huguen)

"We would need to know first of all in case the allegations are true for how long this has lasted, what were the volumes affected and what is the average kind of spreads versus market spreads," she said, pointing out that the longer the alleged price agreements would have lasted, "the worse for the banks."

This was not the first time the role of banks in determining the price of precious metals has been questioned.

In August, the European Commission said it was investigating "anti-competitive behaviour in precious metals spot trading."

And in February, US financial media reported that the Justice Department had opened its own investigation into suspected manipulation of precious metals markets by 10 major international banks: HSBC, Bank of Nova Scotia, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Societe Generale, Standard Bank and UBS.

Goldman Sachs, HSBC, Standard Bank of South Africa and the German chemical group BASF have also been under a US investigation since last November over a complaint alleging rigging of the prices of platinum and palladium.

There are moves underway to reform the 

century-old method of gold price "fixing,"

 since the current global benchmark,

 London's Gold Fix, has already been 

tainted by a rigging scandal (AFP

Photo/Sebastian Derungs)

Julius Baer, which was not part of the US investigation, told AFP Monday it would "constructively cooperate" with the COMCO investigation.

UBS, which did not immediately return requests for comment Monday, said in May it had won immunity from criminal fraud charges in the US probe, after agreeing to provide the Justice Department with information about precious metal transactions.

Reform under way

Precious metals have increasingly come under scrutiny after the discovery that other financial benchmarks have been rigged.

Some of the banks under investigation Monday were already hit by massive fines earlier this year after pleading guilty to US charges of conspiring to rig Libor rates, the global commercial interest rate benchmark used to peg millions of rate-sensitive contracts and loans around the world.

Traders operate in the pit at the London 

Metal Exchange in central London, 21 

September 2007 (AFP Photo/Shaun Curry)

That rate is estimated to underpin some $500 trillion worth of contracts.

The price-setting mechanism to determine benchmark prices for precious metals has also been under reform, amid calls for greater transparency.

Panels of banks have until recently agreed on the reference prices for the precious metals.

But last year, the exchange CME Group and financial information giant Thomson Reuters began providing an electronic system for setting benchmark silver prices, and the London Metal Exchange (LME) did the same for platinum and palladium.

There are also moves under way to reform the century-old method of gold price "fixing," since the current global benchmark, London's Gold Fix, has already been tainted by a rigging scandal and attacked by critics as old-fashioned.

A new method for setting the gold benchmark price is expected to take effect in March.

Barclays parts with CEO Antony Jenkins

The chief executive of Barclays, Antony Jenkins, is stepping down, the UK bank announced on Wednesday. The board says new leadership was necessary to take the bank forward.

Deutsche Welle, 8 July 2015

In a statement published on Wednesday, the bank said that "a new set of skills were required for the period ahead" and that the bank needed "to be much more focused on what is attractive, what we are good at, and where we are good at it."

Chairman John McFarlane would act as interim CEO until a replacement for Jenkins, who had led the bank since 2012, could be found, the bank said.

In the statement, Barclays' management stresses that the bank had to "improve revenue, costs and capital performance."

"We also need to become more externally focused and deal with the internal bureaucracy by becoming leaner and more agile," it added.

But the bank said the change of leadership would not equate to a change in strategy at the bank.

Jenkins, who succeeded Bob Diamond - himself forced to resign after the Libor rate-fixing scandal - had been trying to restore the bank's reputation after it was fined £290 million ($447 million, 391 million euros) by British and US regulators in 2012 for attempted manipulation of Libor and Euribor interbank rates in 2005 and 2009.

The bank was also embroiled in a foreign exchange rigging scheme. Six major global banks, including Barclays and British peer Royal Bank of Scotland, were fined a total of almost $6 billion.

ng/jil (Reuters, AFP)

Related Article:

US, Britain fine six top banks nearly $6 bn for forex, Libor abuses

Deutsche Bank co-CEOs resign

The CEOs of Deutsche Bank, Anshu Jain and Jürgen Fitschen, have said they will resign, confirming reports that surfaced on Sunday. The bank has been hit by a number of troubles in the recent past.

Deutsche Welle, 7 June 2015

Jain will be stepping down on June 30, and Fitschen will stay with the bank until next year's main shareholders meeting in May, the bank said in a statement on Sunday. As of July 1, John Cryan, who has been on the Deutsche Bank supervisory board, will be co-CEO with Fitschen until he departs.

The Wall Street Journal, citing an insider, reported Sunday that Germany's largest bank would be announcing the change in leadership.

Last month, labor representatives at the bank's Frankfurt headquarters had called for Jain's resignation amid a revamp expected to slash jobs in a bid to pare down Deutsche Bank's retail and investment banking exposure.

Legal battles

Fitschen is on trial for fraud at a Munich court on allegations that he failed to correct false testimony given by his former colleagues in a court case linked to the collapse of German media mogul Leo Kirch's TV empire.

If found guilty, he could face up to 10 years in prison.

Deutsche Bank was also fined $55 million (49.5 million euros) by US regulators last month for misstating important financial data regarding its potential losses during the 2008 financial crisis.

In addition, the bank is facing several other legal battles. Allegations include charges that it manipulated currency markets, rigged the Libor and Euribor interest rates and did business with countries subject to US sanctions, such as Iran.

The bank has 45,803 staff in Germany and 98,615 globally.

glb/rc (Reuters, AFP, dpa)

Related Article:

CEO shockwaves at Germany's biggest bank

US, Britain fine six top banks nearly $6 bn for forex, Libor abuses

Yahoo – AFP, John Biers, 20 May 2015

The far-flung settlement included guilty pleas from Barclays Bank, JPMorgan

 Chase, Citicorp and the Royal Bank of Scotland for conspiring to manipulate

the massive currency market (AFP Photo/Ben Stansall)

New York (AFP) - US and British regulators fined six major global banks a total of nearly $6 billion between them Wednesday for rigging the foreign exchange market and Libor interest rates.

They said forex traders from the banks had met in an online chatroom brazenly named "the Cartel" to set rates that cheated customers while adding to their own profits in the massive global currencies market.

In the far-flung settlement, Barclays Bank, JPMorgan Chase, Citicorp and the Royal Bank of Scotland all pleaded guilty to US Justice Department charges of conspiring to manipulate the massive currency market.

Switzerland's UBS meanwhile pleaded 

guilty to violating a prior settlement of

 charges for rigging the Libor interest rate 

(AFP Photo/Fabrice Coffrini)

Switzerland's UBS meanwhile pleaded guilty to violating a prior settlement of charges for rigging the Libor interest rate.

And Bank of America was included with the other five in fines levied by the US Federal Reserve in the forex rigging case.

"They acted as partners -- rather than competitors -- in an effort to push the exchange rate in directions favorable to their banks but detrimental to many others," said US Attorney General Loretta Lynch.

"And their actions inflated the banks' profits while harming countless consumers, investors and institutions around the globe."

'The Cartel'

In Wednesday's settlement, the Department of Justice meted out its largest set of antitrust fines ever, assessing $2.5 billion against Barclays, JPMorgan, Citicorp and RBS in the forex case.

Those four, plus UBS and Bank of America, will also pay more than $1.8 billion to the US Federal Reserve over "unsafe and unsound practices" in forex markets.

Barclays, which did not take part in a previous settlement last November with various agencies, was additionally fined more than $1.3 billion by Britain's Financial Conduct Authority, the New York State Department of Financial Services, and the US Commodity Futures Trading Commission.

Combined with a $203 billion Justice Department fine for UBS in the Libor case, and other penalties, the total assessed Wednesday was almost $6 billion.

Regulators described a bold scheme by financial heavyweights to orchestrate trades in the $5.3-trillion-per-day global foreign exchange market.

JPMorgan blamed its role principally on

 a single trader who has been dismissed 

(AFP Photo/John Moore)

Traders from the banks, communicating via the "Cartel" chat room, agreed to withhold bids or offers for euros or dollars at distinct times to protect each other's trading positions, the Justice Department said.

The banks involved represented at least one-fourth of dollar-euro transactions each year and "were uniquely positioned to manipulate the market," said Assistant Attorney General Bill Baer.

A number of traders are facing charges in various countries for their roles in the scheme.

Barclays fined $2.4 billion

The size of penalties on individual banks ranged from the hundreds of millions of dollars to $2.4 billion for British bank Barclays, depending on a bank's involvement in the scheme.

The Barclays sum was high because it had not participated in the November settlement between several banks and the FCA, DFS and CFTC.

Georgina Philippou, the FCA's director of enforcement, called Barclays' role "another example of a firm allowing unacceptable practices to flourish on the trading floor."

Barclays chief executive Antony Jenkins said he regretted that "some individuals" within the bank "have once more brought our company and industry into disrepute."

"This demonstrates again the importance of our continuing work to build a values-based culture and strengthen our control environment," he said.

Citigroup, which had the second largest total fine of $1.3 billion, called the scandal "an embarrassment to our firm, and stands in stark contrast to Citi's values."

Citigroup, which had the second largest

 total fine of $1.3 billion, called the scandal

 "an embarrassment to our firm, and

 stands in stark contrast to Citi's values" 

(AFP Photo/Don Emmert)

Citigroup said it had separately reached an agreement to pay $394 million to settle related private US class action claims.

JPMorgan blamed its role principally on a single trader who has been dismissed.

"The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us, and have significant ramifications for the entire firm," said JPMorgan chief executive Jamie Dimon.

The Justice Department's $203 million fine against UBS, and $60 million levied on Barclays, related to their violating a 2012 settlement for conspiring to rig Libor, the global commercial interest rate benchmark used to peg millions of rate-sensitive contracts and loans around the world.

But, because it offered early cooperation in the forex rigging case, the Swiss bank earned conditional immunity from those charges.

In a settlement announced by the US Justice Department on Wednesday, the banks

agreed to pay close to $6 billion (5.3 billion euros) in fines for their manipulations.

Related Articles:

Six top banks fined for forex, Libor abuses


"The Recalibration of Awareness – Apr 20/21, 2012 (Kryon channeled by Lee Carroll) (Subjects: Old Energy,Recalibration Lectures, God / Creator, Religions/Spiritual systems (Catholic Church, Priests/Nun’s, Worship, John Paul Pope, Women in the Church otherwise church will go, Current Pope won’t do it), Middle East, Jews, Governments will change (Internet, Media, Democracies, Dictators, North Korea, Nations voted at once), Integrity (Businesses, Tobacco Companies, Bankers/ Financial Institutes, Pharmaceutical company to collapse), Illuminati (Started in Greece, with Shipping, Financial markets, Stock markets, Pharmaceutical money (fund to build Africa, to develop)), Shift of Human Consciousness, (Old) Souls, Women, Masters to/already come back, Global Unity.... etc.) -(Text version)

“… The Shift in Human Nature

You're starting to see integrity change. Awareness recalibrates integrity, and the Human Being who would sit there and take advantage of another Human Being in an old energy would never do it in a new energy. The reason? It will become intuitive, so this is a shift in Human Nature as well, for in the past you have assumed that people take advantage of people first and integrity comes later. That's just ordinary Human nature.

In the past, Human nature expressed within governments worked like this: If you were stronger than the other one, you simply conquered them. If you were strong, it was an invitation to conquer. If you were weak, it was an invitation to be conquered. No one even thought about it. It was the way of things. The bigger you could have your armies, the better they would do when you sent them out to conquer. That's not how you think today. Did you notice?

Any country that thinks this way today will not survive, for humanity has discovered that the world goes far better by putting things together instead of tearing them apart. The new energy puts the weak and strong together in ways that make sense and that have integrity. Take a look at what happened to some of the businesses in this great land (USA). Up to 30 years ago, when you started realizing some of them didn't have integrity, you eliminated them. What happened to the tobacco companies when you realized they were knowingly addicting your children? Today, they still sell their products to less-aware countries, but that will also change.

What did you do a few years ago when you realized that your bankers were actually selling you homes that they knew you couldn't pay for later? They were walking away, smiling greedily, not thinking about the heartbreak that was to follow when a life's dream would be lost. Dear American, you are in a recession. However, this is like when you prune a tree and cut back the branches. When the tree grows back, you've got control and the branches will grow bigger and stronger than they were before, without the greed factor. Then, if you don't like the way it grows back, you'll prune it again! I tell you this because awareness is now in control of big money. It's right before your eyes, what you're doing. But fear often rules. …”

Deutsche Bank fined $2.5 bn for rigging key interest rates

Yahoo – AFP, 23 April 2015

Deutsche Bank pleaded guilty to a US charge of wire fraud in connection 

with the scam and admitted to participating in the price-fixing conspiracy

(AFP Photo/Daniel Roland)

New York (AFP) - German banking giant Deutsche Bank will pay a record $2.5 billion for rigging interest rates in a multi-bank conspiracy that undermined global financial markets, US and British authorities said Thursday.

"Deutsche Bank secretly conspired with its competitors to rig the benchmark interest rates at the heart of the global financial system," said US Assistant Attorney General Bill Baer of the Justice Department's antitrust division.

"Deutsche Bank's misconduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere."

Germany's biggest bank agreed to pay the record fine for manipulating the London InterBank Offered Rate, used to peg millions of interest rate-sensitive contracts and loans around the world, to boost its trading positions.

The Frankfurt am Main headquarters of

 Deutsche Bank, which will pay $2.5 billion

 in fines after admitting its guilt in a

multi-bank conspiracy to rig LIBOR

interest rates (AFP Photo/Daniel Roland)

Deutsche Bank's London subsidiary DB Group Services, where most of those who manipulated the rate worked, agreed to plead guilty to one US count of wire fraud in the case.

Deutsche Bank will pay a $775 million penalty to the Justice Department, the largest criminal penalty yet imposed in the LIBOR resolutions, and agreed to a corporate monitor, the first time that has been imposed.

The monitor is part of a US three-year deferred prosecution agreement in which Deutsche Bank admitted its role in rigging LIBOR and participating in a price-fixing conspiracy with other banks by rigging the Japanese yen LIBOR.

Deutsche Bank will continue to cooperate in the Justice Department's continuing investigation.

The deal allows Deutsche Bank to keep its operating license in the United States. The bank's New York branch has more than 1,700 employees and total assets exceeding $152 billion.

In addition, Deutsche Bank will pay $800 million to the US Commodity Futures Trading Commission, $600 million to the New York Department of Financial Services and $344 million to Britain's Financial Conduct Authority.

Deutsche Bank is the sixth bank to resolve LIBOR charges in the long-running US investigation into the scandal, which emerged in 2012 when Barclays was fined by US and British regulators for rigging the benchmark rates.

The bank's misconduct occurred from at least 2003 through early 2011, according to the Justice Department.

For Britain's Financial Conduct Authority, Deutsche Bank will pay a record fine of 227 million pounds for manipulation conducted between 2005 and 2010.

"Deutsche Bank’s failings were compounded by them repeatedly misleading us," said Georgina Philippou, the FCA's acting director of enforcement and market oversight.

Leslie Caldwell, the US assistant attorney general in charge of the criminal division, said that the bank's cooperation at the outset of the government's investigation was "not full and complete" but subsequently improved.

Damning exchanges

Internal communications -- in emails, telephone calls and electronic chats -- revealed how Deutsche Bank employees defrauded counterparties and conspired to manipulate rates.

A 2007 email showed a Deutsche Bank employee bragging about LIBOR manipulations by the Frankfurt and London offices to the head of the bank's global finance unit: "HAVE U SEEN THE 3MK FIXING TODAY? THAT WAS AN EXCELLENT CONCERTED ACTION FFT/LDN. CHEERS."

In a September 2006 exchange, the bank's London desk head pleads with an external banker at Barclays for a reduction in the EURIBOR rate, and apparently got it.

"I’m begging u, don't forget me… pleassssssssssssssseeeeeeeeee… I’m on my knees…," the desk chief wrote.

The external banker eventually agreed, "ok, I'm telling him."

Deutsche Bank said it would book an additional charge of 1.5 billion euros ($1.6 billion) in the first quarter for litigation costs related to the LIBOR case and other issues.

"We have disciplined or dismissed individuals involved in the trader misconduct; have substantially strengthened our control teams, procedures and record-keeping; and are conducting a thorough review of the bank's actions in addressing this matter," said co-chief executives Jurgen Fitschen and Anshu Jain in a statement.

Related Article:

Deutsche Bank poised for major revamp

Belgium charges HSBC with fraud involving diamond dealers

Yahoo – AFP, November 18, 2014

Belgium charges HSBC with fraud, laundering: prosecutor

Brussels (AFP) - Belgian prosecutors charged a subsidiary of British bank HSBC on Monday with fraud and money-laundering worth hundreds of millions of euros, mainly for diamond dealers in the industry's international hub of Antwerp.

Swiss subsidiary HSBC Private Bank SA (Suisse), which is wholly owned by the Asia-focused banking giant, allegedly helped hundreds of clients cheat the Belgian state, a statement from the prosecutors said.

HSBC said in a statement that it "will continue to cooperate to the fullest extent possible".

It is the latest in a series of international investigations into practices ranging from currency exchange rigging, Libor rigging and product mis-selling that has damaged the reputation of major banks.

Banking practices also had helped to spark the 2008 global financial crisis that led to a worldwide recession.

The Belgian prosecutor said the HSBC subsidiary was being charged with serious and organised fraud, money-laundering, criminal conspiracy and illegally functioning as a financial intermediary.

It said the allegations "date back several years and involve soliciting and managing the assets of wealthy clients, mainly from the Antwerp diamond industry."

"The Swiss bank is also suspected of knowingly favouring and encouraging fiscal fraud, giving privileged clients to offshore accounts, particularly in Panama and the Virgin Islands."

Antwerp, a port in Belgian's northern Flemish-speaking region, is home to the global dealers syndicate for diamonds.

In 2012, Belgium's justice minister ordered an inquiry into a growing controversy over possible tax fraud among diamond traders in Antwerp after French authorities handed a list of dozens of dealers suspected of placing assets in Switzerland.

HSBC apologised for its lapses, said reforms had been put in place, and
admitted it was 'horrified' by what it found. Photograph: Gary Cameron/Reuters 

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Five big banks hit with $3.2bn forex rigging fines

Yahoo – AFP, Roland Jackson, 12 Nov 2014

British bank HSBC and US peers Citigroup were among five banks fined

by regulators (AFP Photo/Facundo Arrizabalaga)

The hefty fines centred on London, the world's biggest hub for the $5.3-trillion-per-day forex market, and the British government hailed a move to "clean up corruption" in the City as the financial centre's reputation has been badly damaged in recent years.

British banks HSBC and Royal Bank of Scotland (RBS), US peers Citigroup and JPMorgan Chase, and Swiss lender UBS have all been fined by Britain's Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC).

JPMorgan is one of five banks facing

 huge fines over alleged foreign exchange

rigging (AFP Photo/Timothy A. Clary)

The FCA hit the five banking giants with a record penalty of £1.1 billion ($1.7 billion, 1.4 billion euros), while the CFTC has fined them $1.4 billion.

The Swiss Financial Market Supervisory Authority (FINMA) also announced a settlement of 134 million Swiss francs ($139 million) with UBS over the matter.

Barclays uncertainty

However Barclays -- which was at the heart of the 2012 Libor rate-rigging affair -- was not included in the settlements and remains under investigation by authorities.

The uncertainty sent Barclays' share price sliding 2.15 percent to 229.55 pence in early afternoon deals on the falling FTSE 100 index. The bank had last month set aside £500 million for a potential fine to settle forex allegations.

In recent years, a string of scandals has damaged the reputation of major banks, which sparked the notorious 2008 global financial crisis that led to a subsequent worldwide recession.

The FCA said that it found "ineffective controls" at the five banks between 2008 and 2013, allowing traders "to put their banks' interests ahead of those of their clients, other market participants and the wider UK financial system".

"The traders put their own interests ahead of their customers. They attempted to manipulate the market and abused the trust of the public and us as regulators," FCA chief executive Martin Wheatley told reporters at a press conference in London.

The FCA said that it had proposed new rules for the 36 banks operating in the foreign exchange market.

British banks HSBC and Royal Bank of Scotland (RBS), US peers Citigroup

 and JPMorgan Chase, and Swiss lender UBS have all been fined by Britain's

 Financial Conduct Authority (FCA) and the US Commodity Futures Trading

 Commission (CFTC) (AFP Photo)

The investigation homed in on trading in the world's top 10 currencies, known as the "G10".

Traders at the different banks "formed tight knit groups in which information was shared about client activity", the British regulator said.

It added that traders used code to identify clients without naming the them. They referred to themselves with nicknames like "The 3 Musketeers", "The Players" and "The A-team".

'Conflicts of interest'

"The banks failed to manage obvious risks around confidentiality, conflicts of interest and trading conduct," the FCA said.

At the same time, the CFTC said in a separate statement that the five banks were being punished for "attempted manipulation of, and for aiding and abetting other banks' attempts to manipulate, global foreign exchange benchmark rates to benefit the positions of certain traders."

It added that Citi, HSBC, JPMorgan, RBS and UBS had "coordinated trading with other banks in private chat rooms in their attempts to manipulate" the market.

The CFTC also ordered the banks to "cease and desist from further violations, and take specified steps to implement and strengthen their internal controls and procedures."

Bank of England governor Mark Carney expressed deep concern over the forex scandal.

Regulators say banks attempted to

manipulate global foreign exchange
benchmark rates to benefit certain traders
(AFP Photo/Scott Olson)

"We have been concerned about the circumstances around this and the conduct in markets more generally," Carney said Wednesday.

News of the FCA fine was welcomed by the British government.

"Today we take tough action to clean up corruption by a few so that we have a financial system that works for everyone," said finance minister George Osborne.

"The banks that employed them face big fines -- and I will ensure that these fines are used for the wider public good."

The total FCA fine is a record amount and eclipses the £532 million penalty it handed down over the Libor scandal.

Christopher Dembik, an economist at Saxo Bank in France, said the fines were "extremely weak and perfectly manageable" compared to the banks' holdings.

But he added that it did show a "willingness" of regulators "not to repeat the mistakes made in the last global financial crisis."

EU fines JP Morgan for rigging interest rates

Yahoo – AFP,  Bryan McManus, 21 Oct 2014

The European Commission fined US banking giant JP Morgan more than 61 million
 euros ($78 million) for its role in rigging benchmark international interest rates
(AFP/Timothy A. Clary) 

The European Commission fined US banking giant JP Morgan more than 61 million euros ($78 million) on Tuesday for its role in rigging benchmark international interest rates.

JP Morgan worked with Royal Bank of Scotland in 2008-09 to fix interest rates on Swiss franc LIBOR contracts, another example of major banks colluding "instead of competing with each other," EU Competition Commissioner Joaquin Almunia said.

"Our economy needs a healthy, transparent, well-functioning financial sector. This is why antitrust rules in this sector must be strictly enforced," Almunia said.

LIBOR, the London Interbank Offered Rate, is a key benchmark, in effect used to price the trillions of dollars (euros) in financial instruments, from student loans to mortgages, bought and sold everyday on the markets.

Tiny differentials add up to huge profits and abuse of LIBOR and related benchmarks around the world have been discovered by authorities probing the markets after the global financial crisis of 2007-08.

Many critics blame the collapse on the reckless and corrupt practices allowed to flourish in what they say was an 'anything goes' attitude in parts of the world of high finance, with governments then forced to step in at huge cost to the taxpayer to bailout failed banks -- including RBS, which is now state-owned.

Many of the biggest banks have been ensnared by US and British LIBOR probes, among them Barclays and Lloyds of Britain, Deutsche Bank, Citigroup, Bank of America and Bank of New York Mellon.

At the same time, there are parallel investigations into charges that the top banks similarly rigged foreign exchange rates to get an unfair advantage.

Almunia said that a second similar LIBOR case involved RBS, JP Morgan and Swiss giants UBS and Credit Suisse who fixed a pricing element for the contracts which should have been determined by market forces.

Fines imposed in this second investigation, dating back to events in 2007, brought the total to some 94 million euros, he said.

Both decisions were based on a settlement with the banks, who "recognised their involvement and in exchange received a reduction of 10 percent of their respective fines," the Commission said in a statement.

RBS paid no fine, however, because it owned up to the Commission.

"Acting against financial cartels is one of our top priorities, given the importance of a healthy, transparent, well-functioning financial sector for the entire economy.

"All market players in this sector must be aware that no violation of antitrust rules will be tolerated," the statement concluded.