DOJ: Overseas Banks Must Share AML Information with U.S. Branches

Foreign banking organizations with U.S. operations need to ensure that their foreign operations are in compliance with U.S. anti-money laundering laws, a senior Department of Justice official said today at the ABA/ABA Money Laundering Enforcement Conference in Washington, D.C. “If a financial information does not properly incentivize compliance everywhere, including overseas, it is at risk of violating the [Bank Secrecy Act] here,” said Kendall Day, chief of the Asset Forfeiture and Money Laundering Section at DOJ.

Day cited the case of Germany’s Commerzbank AG, whose New York-based U.S. branch last year forfeited $563 million and paid a $79 million fine for BSA and sanctions violations. He noted that Commerzbank concealed hundreds of millions of dollars’ worth of transactions on behalf of sanctioned Iranian and Sudanese businesses and used its U.S. affiliate to transfer some of these funds. Day added that U.S.-based “compliance officers raised the appropriate warnings” but were ignored by overseas management and stonewalled when they sought information to follow up on transaction monitoring alerts.

“The department has resolved AML and sanctions-based violations by several other financial institutions,” he said, naming several other foreign-based banks with U.S. operations. “These actions demonstrate that institutions continue to struggle to create and incentivize a culture of compliance,” Day added. “If a financial institution operates in the United States…it must comply with U.S. laws. Part of that compliance involves sharing information about potentially suspicious activity with other branches or offices,” regardless of the location of the customer or transaction.