Commerzbank Announcement Regarding Sanctions and Money Laundering Violations
Following the release that Commerzbank nears $1.4 billion-plus settlement with U.S, Commerzbank issued a press release informing that:
Commerzbank has reached settlements with the Department of Justice (“DoJ”), the Treasury Department’s Office of Foreign Assets Control, the New York County District Attorney’s Office, the Board of Governors of the Federal Reserve (“the Federal Reserve”) and New York’s Department of Financial Services (“NYDFS”) regarding U.S. sanctions and New York State business records violations that occurred between 2002 and 2008.
- Settlements regarding sanctions and money laundering (AML) total USD 1,452 m (EUR 1,196 m)
- Additional one-time charge of EUR 338 m in Q4 2014
The Bank has also reached settlements with the DoJ, the Federal Reserve and the NYDFS regarding violations arising from its failure between 2008 and 2013 to maintain adequate policies, procedures and practices for detecting and reporting potential money laundering activities.
Commerzbank built adequate reserves as discussions with the authorities progressed. On 12 February 2015, the Bank announced that a further increase in legal provisions was possible and could be reflected in the final annual financial statements for 2014. Further to the amount already reserved, the Bank will book an additional one-off charge of EUR 338 million in Q4 2014 for these settlements, to be reflected in the final annual financial statements for 2014.
The Bank’s net result and operating result for 2014 will be adjusted to EUR 264 million (preliminarily reported net result EUR 602 million) and EUR 684 million (preliminarily reported operating result EUR 1,022 million), respectively. Under the full application of Basel 3, Commerzbank’s Common Equity Tier 1 ratio (CET 1) stands at 9.3% as of the end of 2014, up from 9.0% at the end of December 2013. The final net result of EUR 282 million in the individual financial statements of Commerzbank AG pursuant to the German Commercial Code (HGB) for 2014 also takes into account the settlements with the US authorities.
Commerzbank has been cooperating with U.S. and New York authorities for a number of years, making available extensive documentation as well as the results of various internal investigations that the Bank commissioned. The Bank has also tolled the statute of limitations during these lengthy investigations.
Over the past several years, the Bank has improved its compliance function and has implemented remedial steps to address the conduct underlying these enforcement actions. Since 2013, the Bank has also made changes in senior compliance personnel and plans to more than double US-based compliance staff by 2016. Efforts are underway to continue the introduction of more comprehensive global compliance policies around the world.
Martin Blessing, CEO at Commerzbank AG, said: “We take these violations very seriously and deeply regret the actions that led to today’s announcements. Today’s settlement concludes a long and arduous process for all involved. Our focus now is on addressing the underlying issues and maintaining the trust of all of our stakeholders – our clients, our shareholders, our regulators and our employees. We have made, and will continue to make, changes to our systems, training and personnel to address the deficiencies identified by U.S. and New York authorities. The U.S. dollar business remains a central component of our product suite to companies and financial institutions worldwide. As an international bank, we have a keen interest in maintaining the highest industry standards everywhere we do business.”
Source: Commerzbank
