Newspaper article International New York Times

German Bank Settles U.S. Charges ; Commerzbank Will Pay $1.5 Billion to Resolve Money Laundering Case

Newspaper article International New York Times

German Bank Settles U.S. Charges ; Commerzbank Will Pay $1.5 Billion to Resolve Money Laundering Case

Article excerpt

The case against Commerzbank is the latest black eye for a major global financial institution that sent tainted money through the American financial system.

Pursuing a trail of illicit money from Geneva to Paris with stops in London, the United States authorities built a sweeping crackdown on some of Europe's biggest banks.

On Thursday, that trail led to Commerzbank of Germany, which agreed to pay nearly $1.5 billion and dismiss some of its employees to resolve an array of charges in the United States. The case, the latest black eye for a giant global bank accused of sending tainted money through the American financial system, closes the book on several investigations into Commerzbank, one of Germany's largest lenders.

One strand of the case focused on Commerzbank's dealings with Iranian companies blacklisted by the United States, showing that the bank processed hundreds of millions of dollars through New York on their behalf. Prosecutors also accused the bank of enabling the Olympus Corporation, the Japanese manufacturer of medical devices and cameras, to orchestrate a huge accounting fraud.

Collectively, the investigations were a magnet for federal and state authorities. No fewer than eight regulatory and prosecutorial offices, in addition to the F.B.I. in New York, took aim at the bank, though it still avoided an indictment, the worst outcome.

"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," said Leslie R. Caldwell, head of the Justice Department's criminal division, which prosecuted the criminal part of the case alongside the United States attorney's office in Manhattan, the district attorney's office in Manhattan and federal prosecutors in Washington.

The overlapping actions, an unusual show of force even by the standards of Wall Street cases, underscore the priority that the United States authorities have placed on money laundering and sanctions violations. Coming months after BNP Paribas settled the biggest of the cases for $8.9 billion, the Commerzbank case signals that the investigation is entering a new and final phase, with only Deutsche Bank, Credit Agricole, UniCredit and Societe Generale left to settle. Standard Chartered settled in 2012 but is under investigation again in connection with new evidence of misconduct.

The cases -- which hinge on violations of the Bank Secrecy Act and the International Emergency Economic Powers Act as well as New York State banking laws -- are a sore spot for many European banks. American banks, of course, have had brushes with the law for manipulating foreign currencies and other misdeeds but have largely avoided the money laundering problems that have dogged their foreign rivals.

Under the agreements announced on Thursday, Commerzbank agreed to a battery of punishments. In addition to the $1.45 billion penalty - - divided among the New York Department of Financial Services, the Manhattan district attorney's office, the United States attorney's office in Manhattan, the Treasury Department, the Federal Reserve and the Justice Department's criminal division -- the bank agreed to admit to its conduct in a statement of facts. …

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