WSJ: Money laundering probe could hold up Commerzbank sanctions settlement
Monday, September 29, 2014 at 7:28AM
Richard L. Cassin in BNP Paribas SA, Barclays, Commerzbank AG, Credit Suisse, Cuba, Iran, Libya, Preet Bharara, Royal Bank of Scotland, Standard Chartered, Sudan, sanctions violations

Image courtesy of CommerzbankThe U.S. Attorney in Manhattan is investigating Germany's  Commerzbank AG for alleged violations of money-laundering laws, the Wall Street Journal reported Friday.

The story by Chris Matthews said the new investigation could block efforts by Commerzbank, Germany's second biggest lender, to settle separate allegations that it violated U.S. trade sanctions by doing business with Iran and Sudan.

"The sanctions probe is more advanced, and Commerzbank had been closing in on a deal with U.S. and state officials that could have required the bank to pay more than $600 million, according to people briefed on the investigation," Matthews reported.

A settlement of the sanctions allegations was set to be finished by the end of the September, according to the report. But the bank's "lax controls for detecting and preventing money laundering. . . in recent days emerged as a sticking point for the settlement," sources told the Wall Street Journal.

U.S. sanctions bar trade with Libya, Cuban, Iran and Sudan, among others.

France's biggest bank, BNP Paribas, pleaded guilty in July to sanctions violations and paid $8.9 billion in penalties.

Other banks that have paid fines to settle U.S. charges of breaching sanctions against Cuba, Libya, Iran, and Sudan include Standard Chartered, Barclays, Royal Bank of Scotland and Credit Suisse.

The huge investigation of possible trade sanctions offenses involves prosecutors and regulators from the Justice Department's criminal division, the Federal Reserve, the Treasury Department, New York’s Department of Financial Services, and the U.S. Attorney's Office and District Attorney's Office in Manhattan.

Sources told the Wall Street Journal that "Justice Department officials are frustrated that the sanctions settlement could be held up by Manhattan U.S. Attorney Preet Bharara's investigation into money laundering."

Both the sanctions and money-laundering investigations "relate to the alleged failure of the [Commerzbank's] internal monitoring and controls to prevent illegal transactions," the WSJ said.

The report said French bank Crédit Agricole SA is also in negotiations with prosecutors and could pay more than $600 million to resolve its sanctions probe before the end of the year.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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