Fed Orders Commerzbank's N.Y. Branch to Strengthen Anti-Laundering Controls

The Federal Reserve Board has taken action against the U.S. branch of Germany's Commerzbank for failing to comply with anti-money-laundering regulations.

The central bank also lifted orders against three other banks.

The New York branch of Commerzbank AG, in Frankfurt, Germany, was hit with a cease-and-desist order on Oct. 16. The order follows a June 2012 written agreement with the $870 billion-asset bank, in which it agreed to improve the branch's compliance with anti-money-laundering regulations.

The cease-and-desist order, issued after the New York branch failed to pass an examination of its risk-based compliance program, requires Commerzbank to hire an independent consultant to search for suspicious activity in clearing transactions between May 31, 2012, and Oct. 31, 2012. Commerzbank must revise its due diligence program that assigns risk rating to bank clients, including foreign correspondent accounts and submit a written plan to improve oversight of anti-laundering compliance.

The Fed also lifted an Aug. 2009 cease-and-desist order against First Bancshares (FBSI), based in Mountain Grove, Mo., according to a press release from the company Thursday. The order, terminated on Sept. 24, required the $192 million-asset company to reduce troubled assets, improve earnings and revise risk management practices. With the lifting of the order, First Bancshares is no longer subject to any written restrictions.

"We are pleased with the lifting of the order, which reflects the results of our hard work and determination in improving credit quality and reducing nonperforming assets," Brad Weaver, the chairman and chief executive officer of First Bancshares, said in the release. "We are well positioned for the future and will continue ... to strengthen our franchise and return the company to profitability."

The Fed also lifted orders against two other banks. Premier Bank in Denver was released from a prompt corrective action directive issued in May 2012. The $47 million-asset Premier Bank was ordered to either increase capital or make plans to merge with or sell itself to another institution within 90 days.

Union Bancshares, a $219 million-asset company based in Marksville, La., was released from an August 2010 written agreement. Union agreed to takes steps to comply with the consent order issued by the Federal Deposit Insurance Corp. and state regulators in January 2010, which required the company to improve capital, review its loan portfolio, improve earnings and increase its allowance for loan and lease losses.