The ink is barely dry on the BNP Paribas (BNPP) settlement with the United States government, and there is yet another European bank or two in potential legal trouble over economic sanctions.
According to The New York Times:
A spokeswoman for Commerzbank in Frankfurt declined to comment on Tuesday on news that the bank was close to a settlement in an investigation into whether it transferred money through its American operations on behalf of companies in Iran and Sudan. A spokesman for the German Finance Ministry also declined to comment or to say whether government representatives were involved in any settlement talks with the American officials.
… Commerzbank disclosed as early as 2010 that it was under investigation over suspicions that it had violated sanctions. In its 2013 report, the bank said it was being investigated by the New York district attorney, the United States Justice Department and other officials over suspicions that it had violated sanctions against Iran, Sudan, Myanmar and Cuba.
Compared to the close to $9 billion fine imposed on BNPP, the $500 million potential penalty reported in the Commerzbank matter is federal budget dust. In addition to Commerzbank, Reuters reported that Deutsche Bank is also in settlement talks for the same issue:
U.S. authorities have begun settlement talks with Germany’s Commerzbank and Deutsche Bank over their dealings with countries blacklisted by the United States, extending a crackdown on European banks at a delicate point in U.S.-German relations.
The talks with state and federal authorities have just begun, a source with direct knowledge of the regulatory investigations told Reuters, and the timing of a deal is unclear. Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE) declined to comment.
One of the favorite, albeit specious, arguments in this town against U.S. economic sanctions is that they do not work; that we accomplish more with “talking” and “engaging” the likes of Iran, Cuba, drug dealers, gang members, etc.
These recent, and I hear many more to come, enforcement actions should remind even the most ardent opponent of economic sanctions that these tools of state power have been undermined not only by the targets, but by U.S. friends as well.
Yet even with the lawbreaking and sanctions evasions, Iranian and Cuban regime leaders go just about apoplectic when asked about U.S. sanctions. Why? Because, in the end, they work.