Commerzbank Fined for Money Laundering Compliance Failure

A German financial regulator has reportedly fined Commerzbank $1.5 million for anti-money laundering violations.

BaFin said Monday (April 11) that the bank failed to update customer data on time and did not provide sufficient security measures, Reuters reported.

This, the report added, led to inadequate due diligence in three cases, which meant that the bank had violated its anti-money laundering (AML) obligations.

“Commerzbank AG and the former comdirect Bank AG, of which Commerzbank AG is the universal successor, had breached their supervisory duties,” the watchdog said.

Commerzbank said on Monday it has reworked due diligence and updated customer data after it acquired comdirect.

“Processes were adjusted accordingly and the data updates were completed in full in 2022,” the bank told Reuters. “BaFin’s requirements were of course fulfilled.”

The fine comes at a time when, per research by PYMNTS Intelligence and Hawk AI, more than 40% of financial institutions (FIs) are seeing rising volumes of fraud and financial crime.

That research found that 70% of FIs say they are now using artificial intelligence (AI) and machine learning to combat fraudsters and other criminals.

“Uncovering whether someone is who they say they are is critical,” PYMNTS wrote. “Separate data show that 4.6% of transactions were classified as synthetic identity fraud.”

In addition, joint research by PYMNTS Intelligence and Featurespace found — after speaking with 200 executives from a range of FIs with assets of at least $5 billion — a heightened awareness about money laundering and the need for innovation to prevent it.

The research found that 95% of AML executives consider using advanced technology in these efforts a “high priority.”

But money laundering doesn’t always involve high-tech efforts to evade the authorities. As noted here Sunday (April 21), it can sometimes mean just loading a suitcase up with cash.

A report by The Wall Street Journal (WSJ) found that money laundering operations funnel hundreds of billions of dollars in ill-gotten funds that way each year, as banks increase their suspicious transaction monitoring in the wake of various money-laundering scandals.

“You just can’t walk into a bank with this much money without being flagged,” George Voloshin, of ACAMS, a money laundering watchdog group, told the newspaper. “You will be arrested at the next branch.”