On June 23, 2023, the Board of Governors of the US Federal Reserve System, which regulates foreign banking operations in the United States, announced the termination of enforcement actions against Commerzbank AG – Frankfurt am Main, Germany and Commerzbank AG – New York Branch, New York, New York.
The enforcement actions were initiated in June 2012 with an agreement between Commerzbank-Frankfurt, Commerzbank-New York, and the Federal Reserve Bank of New York. Prior to the agreement, Federal Reserve examiners had found that Commerzbank had failed to establish internal controls and independent testing for one business line – bulk cash transactions – and that the bank had not performed adequate customer due diligence on the correspondent account maintained by Commerzbank-New York for its German parent. The agreement required the bank to devise, implement, and submit to the Federal Reserve a revised written Bank Secrecy Act/anti-money laundering compliance program, a currency transaction reporting program, and a suspicious activity reporting program. The agreement also required the bank to engage an independent consultant to conduct a review of account and transaction activity in the bulk cash transactions sector, and to provide monthly progress reports to the Federal Reserve. The agreement was, by its own terms, to remain in effect until stayed, modified, terminated or suspended by the Federal Reserve.
In October 2013, while acknowledging Commerzbank’s continuing efforts to comply with the 2012 agreement, the Federal Reserve found upon examination that another of the bank’s business lines – foreign correspondent accounts – fell short of full BSA/AML compliance. The bank therefore consented to the entry of a cease and desist order requiring it to develop an acceptable written management oversight plan setting out clearly defined roles and responsibilities for BSA/AML compliance, delineating processes for escalating issues to senior management, allocating adequate resources to the compliance function, and ensuring adequate oversight by the bank’s managing board of directors. The order also required the bank to engage an independent consultant to review and report on BSA/AML compliance. The order explicitly did not supersede the 2012 written agreement, and would, by its terms, remain in effect until stayed, modified, terminated or suspended by the Federal Reserve.
In March 2015, another cease and desist order was issued in the matter of Commerzbank-Frankfurt, following an investigation by the US Department of Justice, the District Attorney for the County of New York, New York, the Office of Foreign Assets Control of the US Department of the Treasury, the New York State Department of Financial Services, and the Board of Governors of the Federal Reserve. Under the terms of this order, Commerzbank-Frankfurt paid $200 million to resolve allegations that its head office and other offices outside of the United States had failed to provide timely and accurate information about transactions by the bank’s foreign-based customers, resulting in the processing by Commerzbank-New York of hundreds of millions of dollars in transactions without adequately complying with BSA/AML requirements. The order also required the bank to implement an acceptable program for compliance with US law governing anti-money laundering and sanctions, and submit annual reviews of OFAC compliance policies and procedures and a risk-focused sampling of US dollar payments compiled by a qualified independent third party. The 2015 order, like the 2013 order, explicitly did not supersede the 2012 written agreement, and would, by its terms, remain in effect until stayed, modified, terminated or suspended by the Federal Reserve.
The Federal Reserve’s June 23, 2023 press release terminates the June 2012 agreement and the two cease and desist orders, effectively acknowledging that their requirements have been met, the bank is in compliance with applicable law, and no further enforcement action is needed.