Germany's Commerzbank is urgently rectifying 'severe' flaws in its procedures for detecting suspicious transactions following an investigation by regulator Bafin into alleged Russian money laundering.
The watchdog says it will be taking no further action against Commerzbank or its directors, acknowledging the rapid steps taken by the bank to rectify deficiencies in compliance. These were uncovered following a six-month inquiry into an alleged money-laundering scam that centred on the privatisation of the Russian telephone industry in the 1990s.
An audit report for the period 1996-2001 complied on behalf of Bafin picked up on "shortcomings" in the bank's compliance with anti-money laundering legislation, in particular its Central and Eastern Europe division which was not "adequately supervised by those to whom it reported".
Furthermore, the report says there was no appropriate risk evaluation of the transactions examined.
Bafin also found that the compliance department was not adequately staffed or sufficiently involved in the bank's daily business.
The invesitgation has already claimed a senior-level casualty, with the resignation of board member Andreas de Maizière in mid-July 2005.
Klaus-Peter Müller, chairman of the board of managing directors at Commerzbank, says the bank is in the process of overhauling compliance systems and structures: "The measures already introduced include assigning more personnel to the sections responsible for prevention of money laundering, improving system-based monitoring of customers accepted and customer transactions, and enhancing staff awareness by means of specialised training geared more specifically towards risks."