Banks Fined for Helping Countries Avoid US Sanctions
By Russ Warner, VP Marketing & Operations –
When we give banks money for safekeeping, we expect them to be honest in their dealings and to play by the rules, especially in light of the recession. However, it seems some banks still try to circumvent the rules to obtain an unfair advantage.
Commerzbank AG, headquartered in Germany, and its U.S. branch, Commerz New York, will pay $1.45 billion to settle sanctions brought against them for illegal activities. What was their crime? They concealed hundreds of millions of dollars in transactions involving Iranian and Sudanese businesses. The U.S. prohibits the transfer of funds to and from Iranian accounts without prior approval because of Iran’s support for international terrorism and its pursuit of weapons of mass destruction. The U.S. also has sanctions against Sudan for its involvement in destabilizing neighboring governments and its human rights violations, including slavery. In other words, Commerzbank AG may have directly funded terrorist activity and slavery through its business transactions.
It’s quite obvious Commerzbank AG was aware of its activities. It specifically used cover payments to hide information in transactions processed through Commerz New York. In 2003, it designated a group of employees in Germany to review and amend Iranian payments so U.S. sanctions’ filters wouldn’t stop them. Furthermore, Commerzbank AG had an arrangement with an Iranian bank that allowed it to make payments in a manner that concealed the Iranian bank’s name. Commerzbank AG used similar schemes to help its Sudanese clients evade U.S. sanctions.
This wasn’t just the activity of a few, low-level employees either. In one instance, the bank was asked to provide false documents, of which an executive said, “[This] made clear that our bank could be subject to both civil and criminal penalties.” In other cases, executives expressed suspicions about conducting these transactions, and one executive worried what would happen if, “any negative news is splashed on the front page.”
The Need to Screen Executives
These actions would have been prevented if the bank prized integrity over the financial bottom line. If companies wish to avoid similar problems of corruption in their own ranks, they must create a culture of honesty from the executive level down. To assist with this process, there is a new lie detector on the market called EyeDetect®. This new technology is the best pre-screening tool available. With 85 percent accuracy and results in under an hour, EyeDetect can determine who has a history of criminal activity. This provides companies with the knowledge they need to make the best selection when hiring candidates and thereby avoid embarrassing, illegal and costly situations — such as the one Commerzbank AG just experienced.