U.S. Department of the Treasury

 

Treasury Settlement part of Interagency Investigation into Apparent Violations of Sanctions Programs

WASHINGTON – As part of a combined $718 million settlement of alleged sanctions violations and related conduct with Federal and state government agencies, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $258,660,796 million agreement with Commerzbank AG (Commerzbank) to settle its potential civil liability for apparent violations of U.S. sanctions regulations.  Today’s settlement resolves OFAC’s investigation into apparent violations by Commerzbank of U.S sanctions programs relating to Iran, Sudan, Proliferators of Weapons of Mass Destruction, Burma, and Cuba. 

OFAC worked closely with its counterparts at the Board of Governors of the Federal Reserve System (Board of Governors), the Federal Reserve Bank of New York, the U.S. Department of Justice (DOJ), the New York County District Attorney’s Office (DANY), and the New York State Department of Financial Services (NYDFS).  Together, the agencies collaborated closely throughout the investigation to ensure the settlement with the bank was global.  Today’s OFAC settlement is being entered into simultaneously with the bank’s resolution of the matter with the Board of Governors, DOJ, DANY, and the NYDFS.  

“Today’s settlement is the result of a thorough interagency investigation into Commerzbank’s activities involving sanctioned countries and parties,” said OFAC Acting Director John E. Smith.  “This action highlights our continuing efforts to vigorously enforce U.S. sanctions laws, and also demonstrates the risks that financial institutions face if they conduct business in or through the United States for the benefit of sanctioned countries or parties on OFAC’s List of Specially Designated Nationals and Blocked Persons.”

For several years, up to and including 2010, Commerzbank engaged in payment practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States.  Those practices included deleting or omitting references to Iranian financial institutions and replacing the originating bank information with Commerzbank’s name in payment messages sent to U.S. financial institutions.  Commerzbank utilized similar practices to process U.S. Dollar transactions involving Sudan, Burma, and Cuba, as well as involving persons on OFAC’s List of Specially Designated Nationals and Blocked Persons.  Commerzbank also created a process to route payments involving Iranian counterparties to a payment queue requiring manual processing by bank employees rather than routine, automated processing. 

These actions resulted in apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560; the Sudanese Sanctions Regulations, 31 C.F.R. part 538; Executive Order 13382 of June 28, 2005, “Blocking Property of Weapons of Mass Destruction and Their Supporters” and the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. part 544; the Burmese Sanctions Regulations, 31 C.F.R. part 537; and the Cuban Assets Control Regulations, 31 C.F.R. part 515. 

Under the settlement agreement, Commerzbank is required to implement and maintain policies and procedures to minimize the risk of the recurrence of such conduct in the future.  Commerzbank is also required to provide OFAC with copies of submissions to the Board of Governors relating to the OFAC compliance review that it will be conducting as part of its settlement with the Board of Governors.

Commerzbank’s $258,000,000 settlement with OFAC will be deemed satisfied by the bank’s payment of that or a higher amount to DOJ for the same pattern of conduct.

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