German financial services firm Commerzbank will pay $US1.45 billion in fines after it was caught processing thousands of transactions funelling billions of dollars from sanctioned entities.
“Bank employees helped facilitate transactions for sanctioned clients such as Iran and Sudan, and a company engaged in accounting fraud,” said Benjamin Lawsky, superintendent of New York’s Department of Financial Services.
Some bank employees have been fired as result of the inquiry and fines, after tinkering with internal oversight measures and ignoring compliance staff, including one that said, upon resigning, that the bank’s policies were “a time bomb ready to go off.”
The bank will pay varying fines to the The New York Department for Financial Services, US Dept. of Justice, the Federal Reserve and other investigators, that will amount to $US1.45 billion.
For months, rumours and reports had lingered that Commerzbank would face disciplinary action from US regulators.
A statement from DFS noted that overseas employees “felt that New York compliance staff were simply ‘crying wolf,'” but did not specifically identify which Commerzbank workers. Bank employees also allowed, for more than a decade, Olympus Corp., a Japanese medical device company that was sued last year by six banks for massive fraud, to “[perpetuate] its fraud through Commerzbank’s private banking business in Singapore,” the statement said.
Additionally, Commerzbank is required to fire numerous employees US regulators say were responsible for the fraud. This includes executives working in international business, financial institutions, currency & liquidity management and fraud — but the employees were not named in Thursday’s announcement. There was one prior accounting fraud plea affiliated with the Olympus investigation at Commerzbank.
Some personnel altered the bank’s transaction monitoring system to generate fewer ‘red flag’ alerts, something that Lawsky said “highlights a potential broader problem in the banking industry.”
Lawsky has been sounding the alarm regarding risk monitoring and regulatory compliance, and said earlier this year that prior investigations uncovered “millions” of potential red-flag transactions, all at one bank.
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