Global FI fines ‘drop by half’

The value of global financial institution enforcement penalties reduced by 49 per cent in 2021, finds data from Fenergo.

Last year, fines to firms and their employees totalled $5.4 billion for non-compliance with Anti-Money Laundering and data privacy regulations, according to the research. This compares to $10.6 billion in 2020 – when there were several investigations into the 1Malaysia Development Berhad scandal.

Noteworthy cases in 2021 include a $2.03 billion penalty issued to UBS by France over historic tax fraud and $673.2 million in fines by US regulators to a number of banks, including a $100,000,000 fine to UAE institution Mashreqbank PSC over allegedly violating sanctions.

The study found that the total volume of fines levied to financial institutions for compliance breaches was approximately 176 compared to 760 in the same period the year prior.

The report revealed that the average fine value for AML-related compliance breaches issued to financial institutions in 2021 was $34.4 million.

In November, Credit Suisse was fined £147 million the Financial Conduct Authority (FCA) for the issue of corrupt loans worth $1.3 billion. A month later, the UK watchdog fined HSBC $63.9 million for failings in its anti-money laundering processes.

“The decrease in fines in 2021 is largely attributed to a reduction in the number of multi-billion-dollar fines compared to previous years,” said Rachel Woolley, global director of financial crime, Fenergo. “The pandemic has also impacted regulatory investigations; regulators weren’t able to initiate as many on-premise investigations in the last two years which has likely had a knock-on effect on enforcement actions.

“Trends identified in our research, as well as recent financial crime scandals, suggest that financial institutions aren’t adequately equipped to manage the financial crime risks to which they are exposed. Without effective AML/KYC systems and controls that allow firms to not only know their customer and the associated risks, but also understand their behaviour throughout their lifecycle – the door will be left open for criminals.”

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