Commerzbank AG OFAC Settlement: $258.7M (2015)

For several years up to and including January 2010, Commerzbank processed thousands of transactions through U.S. financial institutions involving countries, entities, or individuals subject to OFAC-administered sanctions programs, resulting in 1,596 apparent violations across five programs.

The conduct centered on payment practices that removed, omitted, obscured, or otherwise failed to include references to U.S.-sanctioned persons in SWIFT payment messages sent to U.S. financial institutions. As early as 2002, bank employees deleted or omitted references to Iranian financial institutions and replaced the originating bank information with Commerzbank's name. Employees later created a process to route payments involving Iranian counterparties to a payment queue requiring manual processing rather than routine automated processing. Commerzbank utilized similar practices to process U.S. Dollar transactions involving Sudan, Burma, and Cuba, as well as other persons on OFAC's SDN List.

The apparent violations break down by program as follows: 959 wire transfers totaling approximately $22,033,133 between September 14, 2005 and August 29, 2008, involving Iran in apparent violation of the ITSR; 375 wire transfers totaling approximately $78,289,519.83 between September 12, 2005 and December 19, 2007, involving Sudan in apparent violation of the SSR; 142 wire transfers totaling approximately $39,567,720 between April 6, 2006 and January 8, 2010, involving property or interests in property of SDN-listed persons in apparent violation of E.O. 13382 or the WMDPSR; 64 wire transfers and other transactions totaling approximately $5,110,267.57 between September 14, 2005 and December 14, 2007, involving Burma in apparent violation of the BSR; and 56 wire transfers totaling approximately $2,283,456.26 between September 23, 2005 and December 20, 2007, involving Cuba in apparent violation of the CACR.

OFAC determined that Commerzbank did not voluntarily self-disclose these apparent violations and that the apparent violations constitute an egregious case. Both the statutory maximum and base civil monetary penalties were $574,801,770.

The base penalties by program were: $242,032,865 for the 959 Iran-related transactions (ITSR); $209,480,056 for the 375 Sudan-related transactions (SSR); $99,813,658 for the 142 WMD proliferator transactions (E.O. 13382 / WMDPSR); $19,835,191 for the 64 Burma-related transactions (BSR); and $3,640,000 for the 56 Cuba-related transactions (CACR).

The settlement amount of $258,660,796 reflects OFAC's consideration of aggravating and mitigating factors pursuant to the General Factors under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A. Commerzbank's obligation to OFAC was deemed satisfied by payment of an equal or greater amount in satisfaction of penalties by the Department of Justice and the New York County District Attorney's Office arising out of the same pattern of conduct.

The OFAC settlement is part of a global settlement among Commerzbank, OFAC, the U.S. Department of Justice, the New York County District Attorney's Office, the Federal Reserve Board of Governors, and the Department of Financial Services of the State of New York. The Department of Justice and the New York County District Attorney's Office separately imposed penalties on Commerzbank arising out of the same pattern of conduct; Commerzbank's $258,660,796 obligation to OFAC was deemed satisfied by payment of an equal or greater amount in satisfaction of those penalties.

The conduct in this case centered on the systematic alteration of SWIFT payment messages to remove, omit, or obscure references to U.S.-sanctioned persons before routing transactions through U.S. financial institutions, a practice that began as early as 2002 and continued for years. OFAC found that Commerzbank lacked adequate policies or procedures to ensure compliance with the sanctions programs administered by OFAC, and treated that failure as an aggravating factor. Management's knowledge of, or reason to know of, the conduct was treated as aggravating as well.

Commerzbank received mitigating credit for cooperating with OFAC's investigation through an extensive internal investigation, responding to requests for information, and executing a statute of limitations tolling agreement with multiple extensions, and for taking remedial action in response to the apparent violations.

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