Commerzbank paying $1.45B to settle cases on US sanctions

Commerzbank paying $1.45B to settle cases on US sanctions
BY MARCY GORDON AP BUSINESS WRITER
03/12/2015 7:05 PM 03/12/2015 7:05 PM

WASHINGTON
Germany's Commerzbank AG is paying $1.45 billion in agreements with U.S.
and New York authorities for alleged violations of U.S. sanctions
against countries including Iran and lapses in prevention of money
laundering.

Commerzbank will avoid criminal prosecution by the U.S. Justice
Department and the New York City district attorney's office under the
agreements announced Thursday. In return, the bank admits responsibility
for the violations and promised to establish strict internal controls.

The total $1.45 billion in fines is close to the landmark $1.9 billion
settlement by HSBC, Europe's largest bank, of similar allegations in 2012.

Last year France's largest bank, BNP Paribas, agreed to pay nearly $9
billion and pleaded guilty to federal and New York state charges of
processing transactions for clients in countries under U.S. sanctions.

Regulators have put big banks under greater scrutiny since the financial
crisis for moving funds through the U.S. financial system from
international criminals and on behalf of nations under U.S. sanctions.
Since 2009, major European banks Credit Suisse, Barclays, Lloyds, and
ING have all paid big settlements related to allegations that they moved
money for individuals or companies on the U.S. sanctions list.

In the case of Commerzbank, the regulators cited violations of sanctions
against Iran, Sudan, Burma and Cuba.

The regulators said Commerzbank concealed activity by, for example,
stripping out information identifying clients that were subject to
sanctions in order to process more than $253 billion in transactions for
Iranian and Sudanese companies or organizations. In addition, they said,
gaps in Commerzbank's oversight to prevent money laundering allowed
payments to flow through the New York branch that aided an accounting
fraud by Japanese optics maker Olympus Corp.

Olympus and several executives pleaded guilty in 2012 to charges related
to a $1.7 billion accounting fraud aimed at covering up investment losses.

Commerzbank is paying penalties of $172 million to the Justice
Department, $300 million to the U.S. attorney's office in Manhattan,
$200 million to the Federal Reserve, $610 million to New York state and
$172 million to the Manhattan district attorney's office.

The bank also agreed to terminate some employees and install an
independent monitor in its agreement with New York state regulators.

Commerzbank, based in Frankfurt, Germany, said in a statement that it
has taken steps in recent years to correct the problems and is
increasing its staff that oversees bank compliance with regulations.

"We take these violations very seriously and deeply regret the actions
that led to today's announcements," Commerzbank CEO Martin Blessing said
in a statement. "We have made, and will continue to make, changes to our
systems, training and personnel to address the deficiencies identified
by U.S. and New York authorities."

Assistant U.S. Attorney General Leslie Caldwell said the bank "concealed
hundreds of millions of dollars in transactions prohibited by U.S.
sanctions laws on behalf of Iranian and Sudanese businesses."
Commerzbank did so "even though managers inside the bank raised red
flags about its sanctions-violating practices," Caldwell said in a
statement.

Source: Commerzbank paying $1.45B to settle cases on US sanctions |
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