On 12 March 2015, Commerzbank AG agreed to pay a total of $1.45 billion in penalties and enter into a three-year deferred prosecution agreement with the Department of Justice for doing business with Iran and other sanctioned countries, in addition to failing to have in place adequate money laundering and fraud controls. Alongside forfeiture and fines levied by other bodies and regulators, $258.6m of the total penalty is due to the Department of Justice under an agreement with the US Treasury’s Office of Foreign Assets Control to settle potential civil liability for the apparent sanctions violations.
In the settlement agreement between OFAC and Commerzbank, the US Treasury states that between 2002 and 2010 “Commerzbank processed thousands of transactions through US financial institutions that involved countries, entities, or individuals subject to the sanctions programs administered by OFAC”, adding that Commerzbank employees “omitted references to Iranian financial institutions” and “created a process to route payments involving Iranian counterparties to a payment queue requiring manual processing by bank employees”. It goes on to state that “Commerzbank utilized similar or other practices to process US Dollar transactions involving other sanctioned countries including Sudan, Burma, and Cuba, as well as other persons listed on OFAC’s list of Specially Designated Nationals and Blocked Persons”.
In a statement issued on 12 March 2015, US Assistant Attorney General Leslie Caldwell noted that “Commerzbank undermined the integrity of our financial system and threatened our national security by hiding the business they were doing with entities in Iran and Sudan”, warning that “Financial institutions must heed this message: banks that operate in the United States must comply with our laws, and banks that ignore the warnings of those charged with compliance will pay a very steep price”.
Commerzbank was also found to have failed to maintain adequate policies, procedures, and practices to ensure its compliance with US law, allowing a multibillion dollar securities fraud to be operated through it and Commerz New York.
Under the deferred prosecution agreement, if Commerzbank complies with its terms the US government has agreed to seek dismissal of the criminal charges after three years. No individuals have been charged.
In June 2014, BNP Paribas agreed to pay $8.97bn in penalties for its own US sanctions violations (see previous blog here).