The Federal Reserve Board of Governors terminated a trio of
The moves end the German bank's more than decade-long entanglement with U.S. regulators and law enforcement agencies.
Commerzbank's New York outfit had been the subject of legal and regulatory scrutiny dating back to 2012. A probe by the Department of Justice, the Treasury Department's Office of Foreign Asset Control and other agencies found that the bank was facilitating transactions that violated U.S. sanctions against Iran, Cuba, Sudan and Burma, as well as various targeted individuals.
Between 2002 and 2010, the bank processed roughly 60,000 prohibited transactions with a total value of $253 million, according to the New York State Department of Financial Services, the state's financial regulatory authority.
Commerzbank owned up to the issues in 2015 and has sought to cooperate with investigators. The bank did not immediately respond Friday to a request for comment.
As a result of investigations by the Fed, NYDFS, OFAC, the DOJ and the Manhattan district attorney, the bank ended up paying approximately $1.45 billion in total penalties, including $342 million to settle criminal charges, as well as $376 million in civil penalties paid to the Fed and New York State. The remaining $734 million in penalties — for Bank Secrecy Act/Anti-Money Laundering (BSA/AML) violations — were paid to the U.S. government, the Fed and New York state regulators.
The Fed first cited Commerzbank's New York branch in 2012 for failing to comply with anti-money laundering requirements and the Bank Secrecy Act when processing bulk cash transactions for overseas clients. The bank agreed to review past transactions to identify instances of noncompliance. It also agreed to devise plans for improving its suspicious activity monitoring and reporting process, and for overhauling its BSA/AML compliance program.
Subsequent findings by the Fed led to cease-and-desist orders against Commerzbank in 2013 and 2015. Those orders required the bank to implement new training programs and oversight mechanisms, and to be subjected to enhanced reporting requirements. The 2015 order also mandated the termination of employees who played a "central role" in processing the prohibited transactions, and it barred Commerzbank from hiring any of them back in the future.
Headquartered in Frankfurt, Commerzbank has roughly $500 billion of assets. The firm's North American operations account for less than 1% of its total consolidated assets, according to a resolution plan filed with the Federal Deposit Insurance Corp. last year. Its two main entities in the U.S. are its New York branch and a broker-dealer firm known as Commerz Markets LLC.
