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New York could soon start holding bank executives personally responsible for their institutions' anti-money-laundering controls, the state's top financial regulator said Wednesday.
February 25 -
HSBC has spent billions of dollars in compliance and legal costs, but the damaging scandals keep coming. Renewed attention on the problems at its Swiss private bank could fuel the debate about whether banks this size are too big to manage.
February 17 -
The Obama Administration's issued looser rules Thursday for transactions in the small island nation, but banks still face impediments.
January 15
Commerzbank has been ordered to pay a total of $1.45 billion in penalties, fire employees and install an independent monitor after it cleared transactions for entities in Iran and Sudan and facilitated payments for a Japanese company accused of accounting fraud.
The German company violated financial sanctions against Iran and Sudan by processing about 60,000 transactions worth over $253 billion, while engaging in deceptive practices to mask what it was doing, according to the New York Department of Financial Services. Iran and Sudan are labeled "state sponsors of terrorism" by the State Department and are subject to economic sanctions.
Commerzbank, between 2002 and 2008, "used altered or non-transparent payment messages" to allow the two countries to process thousands of transactions without being tripped up by financial sanctions. Commerzbank deliberately changed the nature of the transactions to hide them from regulators and circumvent U.S. law, the Department of Financial Services said.
"From at least May 2003 to July 2004, Commerzbank altered or stripped information from wire messages for payments involving Iranian parties subject to U.S. sanctions so as to hide the true nature of those payments and circumvent sanctions-related protections," the NYDFS said in a release announcing the penalties.
Commerzbank employed a "special team" to process Iranian transactions by stripping information from SWIFT messages to allow transactions for Iranian government-owned institutions to be approved.
The bank also processed about 1,800 transactions on behalf of Sudanese financial institutions, totaling more than $224 million, to skirt international sanctions against Sudan. The African nation has been accused of genocide, in addition to harboring Osama bin Laden during the 1990s.
Commerzbank also aided Olympus Corp., a Japanese manufacturer of optical products, in perpetuating "a massive accounting fraud" that kept secret hundreds of millions of dollars of losses. The regulator said that Commerzbank violated the law by "creating special purpose vehicles," to allow the Japanese company to mislead auditors.
"What is especially disturbing is that employees sought to alter the Bank's transaction monitoring system so that it would create fewer 'red flag' alerts about potential misconduct, which highlights a potential broader problem in the banking industry," Benjamin Lawsky, New York's superintendent of financial services, said in a released statement.
Commerzbank's fines will be divided up and paid to five separate agencies: $610 million to the Department of Financial Services, $300 million to the U.S. Attorney's Office for the Southern District of New York, $200 million to the Federal Reserve and $172 million each to the Manhattan District Attorney's Office and the U.S. Department of Justice.
Commerzbank was also ordered to fire individual employees, including its New York head of anti-money laundering, fraud and compliance. The company must also hire an independent monitor to ensure future legal and regulatory compliance.
