Commerzbank AG Settles Criminal Charges

Banks can be prosecuted by U.S. authorities for failure to report offshore accounts, for failure to report suspicious transactions, for processing suspicious transactions, and a host of other criminal acts. Many of the criminal acts that banks are prosecuted for involve the financial institution facilitating wrongdoing on the part of customers with which it is conducting business.

When banks are prosecuted, customers who engaged in the unlawful transactions often end up facing criminal charges or other legal actions as well. A Boston criminal tax lawyer provides legal representation in situations where clients are charged with violating tax or financial laws.

Give us a call if you are concerned that your bank may give information to the authorities that could result in legal problems for you.

Bank Pays Billions in Fines for Violating Secrecy Laws & Other Regulations

Commerzbank AG and Commerzbank NY have recently been added to the list of financial institutions facing prosecution by U.S. authorities. Commerzbank AG is based in Frankfort, but has a New York branch.

The financial institutions were charged with a variety of illegal actions including violating the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA).

The banks faced prosecution and regulatory action from the Board of Governors of the Federal Reserve System; the Office of Foreign Assets Control (OFAC), which is a part of the Treasury Department; New York prosecutors; and the federal Department of Justice.

To resolve the pending legal actions and criminal charges, Commerzbank AG and Commerzbank New York paid out a total of $1.45 billion in fines and forfeitures. The banks also entered into a deferred prosecution agreement. For three years, compliance with the agreement is required, after which time the authorities will dismiss the cases.

The fines and deferred prosecution agreement stemmed from allegations that the financial institutions violated the International Emergency Economic Powers Act (IEEPA) and the Bank Secrecy Act (BSA). Commerzbank was accused of failure to do due diligence on foreign transactions as well as a failure to report suspicious transactions to the appropriate authorities.

The charges against the bank originated, in part, from the financial institution’s processing of transactions by businesses from the Sudan, and businesses from Iran, despite the sanctions against these two countries. Bank managers reportedly raised red flags about the way the transactions were being structured to obscure their sources and avoid sanctions considered necessary for national security.

The charges against the bank also stem from the financial institution’s facilitation of securities fraud committed by Olympus. Olympus, a Japanese company, allegedly committed a multi-billion dollar accounting fraud that involved, among other things, taking off-the-books loans. Commerzbank processed an estimated $1.6 billion in transactions for Olympus as a part of the securities fraud.

The charges against the bank were serious but, as in the majority of cases where financial institutions are accused of wrongdoing, the cases settled without formal prosecution when a deferred prosecution deal was reached.

Often, financial institutions end up turning on their customers and providing information to authorities as part of settlement deals. If you are concerned that you may be accused of committing fraudulent transactions or violating tax or financial laws, call Kevin Thorn, a criminal tax lawyer in Boston, today for assistance.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989