According to the U.S. government, less than a year after the 09/11 terrorist attacks on the United States by radical Islamists, a European financial services powerhouse engaged hide the ball tactics to help terrorist states and other bad apples evade U.S. economic sanctions. It is still taking place. Europe, are we still allies?
The Treasury Department Office of Foreign Assets Control (OFAC), the lead government agency for sanctions enforcement, yesterday released the results of OFAC’s “investigation into Commerzbank’s use of payment practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States.”
Basically, senior bank officials set up a system to helped the Iranians, Cubans, and other bad actors unlawfully move money in the international financial system. In doing so, Commerzbank, prior sanction violators, as well as various European governments made it much easier for Iran to attain its nuclear power goals as well as enhance its Shahab missile arsenal that today includes missiles capable of reaching several European capitals.
You may be wondering, “Would Iran ever dare bomb Europe?” If they bombed a Jewish community center and Israeli embassy in far away Argentina in the 1990s, why not Europe? Russia was not supposed to invade Georgia or Ukraine either, but they did. Old Europe has been in a political slumber for at least a decade. Wake up.
The energy issue may complicate this process, but Europe needs to make a decision about how it plans to break the energy umbilical cord to the east, or at least find a clever way to remind Russia, Iran, and others nearby that it can, someday maybe soon, look west for energy alternatives. This would be good for America. It will create much-needed jobs, for starters.
Commerzbank was lucky. They’ve skated by with a small, $258 million fine as well as various compliance and reporting requirements. In the overall scheme of things it is budget dust for a bank this size.
Congress should take a much closer look at enforcement actions involving state sponsors of terrorism the past decade or so. What are the Europeans doing to crack down on this, seemingly, recurring behavior? How do these financial flows reach the Americas (because they do and Cuba, and I suspect Venezuela, is right in the middle of it)? How many countries were involved (because I suspect other banks helped and governments just ignored it)?
If Commerzbank still does business in Cuba, it should be prohibited from providing correspondent banking services for at least one year for any transactions that involve the U.S. financial system. Correspondent banking services for Cuba, for some odd reason, were authorized on January 16 by the Obama Administration. It is a reasonable and prudent move that should remain in place until the compliance process and Settlement Agreement terms have been satisfied to OFAC’s satisfaction.
Remember that in addition to radical ideology, money is the lifeblood of terrorist organizations such as al-Qaeda, FARC, ISIS, and many others. Some experts would disagree, but I think there are state actors helping these people and groups. In some cases, countries and banks just turn away when they should know better. Cracking down on the money flow is not easy. Some of these groups don’t use official banking systems. ISIS allegedly has a presence in 90 countries. This does not happen without some connection to the international financial system, including in places such as Latin America (Panama received the memo and acted). Banks are on the front line. They need to do better.
You can read the Settlement Agreement is embedded below and can also be downloaded at the OFAC website.