Saturday, March 14, 2015


If you have read the complete text of the Settlement Agreement* between Treasury's office of Foreign Assets Control (OFAC), and Commerzbank AG, you should be sick to your stomach, for the egregious nature of a decade of flagrant and intentional Iran, Cuba, Sudan and Burma sanctions violations, which resulted in a $258,660,796 civil penalty, is one of the worst we have ever seen. Notwithstanding the monetary penalty, I consider the Settlement Agreement to be an utter failure, on the part of OFAC, to impose a penalty commensurate with the magnitude of the violations, and the damage that the bank deliberately caused, by choosing to violate international sanctions, for pure monetary gain.

The shortcomings, in my humble opinion:

(1) Commerzbank neither admitted, not denied, the statement of facts in the Settlement Agreement. OFAC is NOT the SEC, and to give Commerzbank pass on taking responsibility for its actions is not only wrong, it could affect any subsequent civil litigation against the bank, filed by parties who have been damaged by the bank's actions. The full effect of the Arab Bank  case has not yet been determined, but individuals who, now or in the future, may choose to bring an action against the bank for physical injuries they suffer, should Iran deploy weapons of mass destruction, or ballistic missiles, outside its borders. The bank's admission of wrongdoing would have facilitated such claims, and possibly shortened discovery during litigation.

(2) Where are the rumored mass firings of the Commerzbank executives that have appeared previously in the media ? Unless it is is specified in the Settlement Agreement, how can it be enforced ? If you saw the correspondence in the document, you know that there was organized deception, perjury to regulators, and behind-the-scenes alteration of incriminating information. That had to come from the top, and there has been no press release published, detailing resignations or terminations.

(3) Many of the earliest violations date back to a period close to a decade ago; are we to believe that OFAC did not have evidence of massive Commerzbank violations at least five years ago ? Why the unexplained delay in enforcement ? The turtle-like slow nature of OFAC operation resulted in many, many millions of dollars of Iranian money moving into, and through, the US financial structure.

Given the number of violations, and total amount of money involved, anything less than a suspension of Commerzbank's ability to maintain any branch, representative office, or agency, in the Continental United States is any insufficient penalty. Why allow a bank whose conduct rises to such a level to operate in the United States ? This settlement will only encourage additional international banks to
choose to further flaunt international and US sanctions. OFAC will be continued to be regarded by international banks as a paper tiger, and one not to be feared.

is this how the world's banks see OFAC ?
*Settlement Agreement

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