US Scrutiny Switches to Commerzbank

US state and federal authorities are reported to have commenced settlement talks with Commerzbank, Germany’s second-largest lender, over the bank’s alleged dealings with Iran and other countries subject to US sanctions.

The bank, which is believed to have transferred money through its American operations on behalf of companies in Iran and Sudan, could reach a settlement as soon as this summer. According to the reports, a potential deal is also expected to pave the way for a separate settlement with Deutsche Bank.

The settlement is expected to include at least US$500m in penalties for Commerzbank. Although prosecutors were still weighing punishments, informed sources quoted in reports said the bank would most likely face a so-called deferred prosecution agreement, which would suspend criminal charges in exchange for the financial penalty and other concessions.

At the end of last month, France’s
BNP Paribas agreed to pay an US$8.9bn penalty
and plead guilty to criminal charges for sanctions violations. Two other French banks Credit Agricole and Société Générale also face investigations into whether they violated United States sanctions.

“Collectively, the deals will provide a capstone to the decade-long investigation into banks that opened the American financial system to tainted money,” according to a report by Jessica Silver-Greenberg and Ben Protess in DealBook, the
New York Times’s
financial news service.

“The investigations into the European banks, which funneled billions of dollars through their New York offices on behalf of foreign clients, underscored the reach of the United States sanctions laws as well as the global demand to do business in dollars.”

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