On June 23, 2023, a decade of legal and regulatory scrutiny ended as the U.S. Federal Reserve terminated all three of its enforcement actions against Commerzbank AG, a leading German lender. Commerzbank is a global financial institution with its headquarters in Frankfurt and offices in several different countries including a New York branch in the United States.

Dating as far back as 2012, Commerzbank’s New York branch has been under the close watch of U.S. authorities for sanction and money laundering violations. The United States imposes strict requirements on local branches of foreign banks to operate in compliance with all applicable federal and state laws, rules, and regulations. Nonetheless, several U.S. agencies, including the Department of Justice and the Treasury Department’s Office of Foreign Asset Control, discovered that Commerzbank was facilitating transactions that violated U.S. sanctions against Iran, Cuba, Sudan, Burma, and several targeted individuals. Commerzbank eventually admitted to using wire stripping, a technique in which interbank payment instructions are altered to remove identifying information that might trigger U.S. sanctions filters. This allowed them to conceal millions of dollars in transactions over the years. In 2015, Commerzbank agreed to relinquish $563 million, pay a $79 million fine and enter into a deferred prosecution agreement with the Justice Department for violations of the International Emergency Economic Powers Act and the Bank Secrecy Act.

Ultimately, Commerzbank’s long history of transgressions highlights the importance of powerful financial institutions maintaining effective anti-money laundering compliance programs and preventing other unlawful transactions. Moving forward, the bank will likely implement a more robust compliance program that abides by U.S. standards and flags suspicious activity in its early stages. Commerzbank has already experienced significant growth over the past year due to a combination of strong customer business and higher interest rates. In fact, the bank more than tripled its net profit in the 2022 financial year. Now, free from three substantial U.S. enforcement actions, Commerzbank can continue to build upon this momentum and increase its influence as a leading German lender.