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Deutsche to pay over half a million to US for sanction violations

By Dan Byrne

Deutsche Bank will pay two settlements totalling $583,100 for processing payments through the United States which are in violation of US sanction regulations.

The US Department of the Treasury disclosed that Deutsche Bank Trust Company Americas has agreed to pay a $157,500 for handling an approx. $29 million payment related to a fuel purchase on behalf of Cypriot-based company IPP.

Separately, they have also agreed to pay $425,600 for handling 61 different transactions for the Russian Krasnodar Regional Investment Bank with the transactions themselves totalling over $276,000.  

Both entities are on the “Specially designated Nationals and Blocked Persons list” set out by the Treasury’s Office of Foreign Assets Control (OFAC). OFAC lists them as designated entities due to their apparent connections to the unrest in Ukraine, which peaked in the period 2014-16.

In both cases, OFAC noted that companies are “large and commercially sophisticated” financial institutions, and that their actions were harmful to the US sanctions programme against persons and entities considered to be fuelling the Ukrainian crisis.  

In the case of IPP, OFAC noted that certain senior managers within the bank’s anti-financial crime division knew of the illegal nature of the transactions, and that they “failed to exercise a minimal degree of caution or care in connection with the conduct.”

Meanwhile, the bank was criticised for failing to pick up on the Krasnodar’s red-flag transactions when they were made. OFAC maintained that the bank should have uploaded Krasnodar’s SWIFT and BIC details into their software to flag them as being on OFAC’s list, but that this was not done.

However, the bank has benefitted in a reduction of settlement amounts – $93,000 for the IPP case and $214,400 for IPP the Krasnodar case – following OFAC’s assessment.

OFAC attribute these reductions to several mitigating factors including the once-off nature of the transactions relative to the large amount which the bank processes annually, and the bank’s commitment to take remedial action in response to the violations.

Yahoo News reports that Deutsche have since commented on the settlements and promised to “take any necessary additional training or make changes to its internal procedures.”

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