Commerzbank to pay $1.45 bn for US sanctions charges

12th March 2015, Comments 0 comments

Commerzbank will pay $1.45 billion to settle criminal charges it hid transactions with Iran and Sudan and conspired with camera-maker Olympus on a massive accounting fraud, US officials announced Thursday.

The second-largest German bank admitted and accepted responsibility for illegal conduct under US sanctions and bank secrecy laws, the Justice Department said.

Prosecutors said Commerzbank from 2002 through 2008 systematically processed transactions with Iranian and Sudanese entities in violation of US sanctions. Bank staff ignored warnings that the transactions were problematic and did not heed advice from auditors to alert US staff.

Commerzbank stripped out information identifying sanctioned parties for some 60,000 transactions totalling $253 billion involving the two countries, said the New York Department of Financial Services.

It also made loans and handled transfers for Olympus, helping the company to hide hundreds of millions of dollars worth of losses in violation of the US Bank Secrecy Act and anti-money laundering rules.

"Commerzbank committed these crimes even though managers inside the bank raised red flags about its sanctions-violating practices," said Assistant Attorney General Leslie Caldwell.

"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."

In the Olympus case, Commerzbank loaned money to off-balance-sheet entities created by Olympus to disguise losses. Commerzbank transacted more than $1.6 billion through its New York division to further the fraud, Justice said.

In September 2012, Olympus and three senior executives pled guilty in Japan to inflating the company's profits by about $1.7 billion.

As with the sanctioned transactions, some Commerzbank officials expressed worry in writing that the work on behalf of Olympus was illegal, but those concerns were not heeded.

A Commerzbank statement said would take an additional 338 million euro charge in addition to prior provisions.

"We take these violations very seriously and deeply regret the actions that led to today's announcements," said Commerzbank chief executive Martin Blessing.

"We have made, and will continue to make, changes to our systems, training and personnel to address the deficiencies identified by US and New York authorities."

© 2015 AFP

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