Sun, Mar 15, 2015

German bank giant Commerzbank has agreed to pay $1.45 billion — its biggest fine ever — and fire an employee to settle investigations into its dealings with black-listed nations like Iran and Sudan.

The bank booted Deepa Keswani, who led anti-money laundering and fraud compliance in New York during the alleged violations, according to a person familiar with the probes.

Keswani was most recently the bank’s New York head of regulatory compliance before her ouster Wednesday.

The settlement resolves two probes into money laundering and sanctions violations. A number of state and federal officials have been investigating the bank, including Manhattan US Attorney Preet Bharara, Ben Lawsky’s Department of Financial Services and Manhattan District Attorney Cyrus Vance.

The Department of Justice, the Federal Reserve and the Office of Foreign Asset Control were also probing Germany’s second-biggest bank by assets.

A number of banks have already been penalized over sanctions and money-laundering violations. French bank BNP Paribas pleaded guilty to criminal charges and agreed to pay almost $9 billion to resolve accusations it violated sanctions against Sudan, Cuba and Iran.

The investigation was sparked when a former banker at Commerzbank, Chan Ming Fon, was arrested and later pleaded guilty to helping Japanese accounting firm Olympus Corp. perpetuate a $1.7 billion fraud, according to the person familiar with the probe.

The transactions tied to the fraud prompted Bharara and other US officials to investigate. The bank allegedly stripped identifying information from incoming wires to avoid red flags that would have alerted regulators to suspicious transactions.

For six years through 2008, Commerzbank employees purposely tried to mislead regulators about the identity of Iranian and Sudanese entities for more than $253 billion in dollar clearing transactions, US officials said.

“Bank employees helped facilitate transactions for sanctioned clients such as Iran and Sudan, and a company engaged in accounting fraud,” Lawsky, the DFS superintendent, said in a statement Thursday.

“What is especially disturbing is that employees sought to alter the bank’s transaction monitoring system so that it would create fewer ‘red flag’ alerts about potential misconduct, which highlights a potential broader problem in the banking industry.”